Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

GREATER LONDON COUNCIL (MONEY) (No. 2) BILL

As amended, considered; to be read the Third time.

Oral Answers to Questions — WALES

Advance Factories

Sir Anthony Meyer: asked the Secretary of State for Wales what discussions he has had with the chairman of the Welsh Development Agency regarding the level of advance factory construction in Wales.

The Secretary of State for Wales (Mr. Nicholas Edwards): I have recently discussed with the chairman the agency's construction plans within the existing cash limit. I am glad to inform the House that the agency is in a position to start work on advance factory building totalling over 600,000 sq. ft. This is in addition to the 2·3 million sq. ft. already planned to start this year. 350,000 sq. ft. will be built in the steel closure areas and the remainder will represent a very substantial start on the WDA's fifth advance factory programme outside the steel closure areas. The agency will also be able to resume its land reclamation programme.

Sir A. Meyer: Is my right hon. Friend aware that that is very good news? In view of the unique efficacy of advance factory construction, both in terms of flexibility and in terms of being highly selective, is he satisfied that the existing limits on the Welsh Development

Agency are adequate to enable it to deploy its full resources for this purpose?

Mr. Edwards: By the announcement today we are ensuring that the existing limits are used to the hilt in the current financial year. However, we are also encouraging the agency to raise additional financial resources from the private sector, and I am confident that it will be able to do so.

Mr. Coleman: Is the right hon. Gentleman aware of the difficulties that are occurring in West Glamorgan—apart from those created by the Secretary of State for Wales—following the liquidation of Messrs. Potters, the builders? Will he bring this matter to the attention of the WDA in order to secure new contractors, so that these factories, which have already been announced, can come into operation much more quickly than might othewise be the case?

Mr. Edwards: I shall certainly discuss that matter with the chairman of the WDA.

Sir Raymond Gower: I welcome the announcement of the building of further advance factories, but in view of the tremendous needs of the Welsh economy at present will my right hon. Friend consider encouraging his Department and the WDA to get together and plan ahead for the acquisition of suitable sites for advance factories in future programmes?

Mr. Edwards: I agree about the importance of having a continuing programme, and I assure my hon. Friend that the WDA is seeking additional sites. It is now clear that additional sites will be available, apart from those previously announced, for example in the Newport area.

Mr. Geraint Howells: In view of the high bank interest rate, does the Secretary of State agree that it will be very difficult to entice industrialists to mid-Wales to take over all these advance factories?

Mr. Edwards: Both in the WDA area and in the mid-Wales area of the DBRW, considerable interest has been expressed in these factories.

Mr. Hooson: Is my right hon. Friend satisfied that the exceptionally good rate


of take-up of advance factories is being maintained in current conditions?

Mr. Edwards: Interest continues at a high level. Only 2·4 per cent. of the WDA's existing factories are standing vacant. I can report that inquiries and visits are continuing.

Mr. Alec Jones: I welcome the announcement of this extra space, but as the announced factories are inside the existing cash limits, we were expecting it. Does the right hon. Gentleman agree that we still have tremendous needs, which were referred to by the hon. Member for Barry (Sir R. Gower), with about 99,000 unemployed, 50,000 redundancies announced in the year and now the possible further threat to Port Talbort and Llanwern? Has the Secretary of State seen today's Western Mail, which refers to the fact that the Government's response to the existing crisis has been woefully inadequate? Will he do something about the inadequacy of all his measures?

Mr. Edwards: I do not accept that verdict. We have a substantial advance factory programme under way, and 47 per cent. of the resources for the entire United Kingdom are going to factory building in Wales. The announcement today is an indication of the intention of the Government and the WDA to see that factory programme rolling forward.

European Community Loans and Grants

Mr. Knox: asked the Secretary of State for Wales how much aid the European Economic Community has given in loans and grants to Wales in the most recent 12-month period for which figures are available.

Mr. Nicholas Edwards: A total of £162 million in the year ending 31 May 1980.

Mr. Knox: Does my hon. Friend agree that the EEC's contribution to the wellbeing of Wales is impressive? What steps is he taking to draw to the attention of the people of Wales the advantages that membership of the Community brings them?

Mr. Edwards: I agree about the scale of the EEC's contribution. Since accession, the receipts in Wales have totalled about £668 million in identifiable grants

and loans, and we are taking every opportunity to publicise them. We are examining additional ways to do so; for example, by identifying projects that have gone ahead thanks to EEC assistance. In that way the people in the locality affected will be aware of where the finance has come from.

Mr. Anderson: How does the Secretary of State reconcile what the Government say here and what Conservative Euro-MPs do in Strasbourg? Is the right hon. Gentleman aware that last Friday Conservative Euro-MPs voted against proposals to increase expenditure under the regional and social funds, and therefore missed the opportunity for extra funds to come to Wales?

Mr. Edwards: I do not believe that that is accurate. As the hon. Gentleman knows, there is disagreement about the budget proposals put forward by the Commission. Nothing has so far happened to prevent Wales from taking full advantage of existing Community resources.

Mr. Best: Will my right hon. Friend endeavour to encourage greater use of European money for roads and infrastructure projects in Wales? Can he give a categoric assurance that the results of the survey to see whether there should be a tunnel under or a bridge over the Conway crossing will be made known before the Summer Recess?

Mr. Edwards: With regard to my hon. Friend's first point, it is advantageous that the recent negotiations in Europe have reduced the total resource cost to the United Kingdom of our membership. That therefore gives the Government resources for essential expenditure, such as on the A55, without imposing too great a strain on the economy. We shall make an announcement about the future road programme and the Conway crossing before the Summer Recess.

Mr. D. E. Thomas: Will the Secretary of State arrange for early discussions with British Rail to ensure that an application is made to obtain EEC regional development grants for the reconstruction of the Barmouth bridge, which it is estimated will cost about £2½ million?

Mr. Edwards: I shall discuss that matter with my right hon. Friend the


Minister of Transport, who is directly responsible for British Rail, and will endeavour to see that if an application goes forward it does so in good time.

Textile Industry

Mr. Barry Jones: asked the Secretary of State for Wales what representations he has received about the reduction in the work force in the textile industry in East Flint.

Mr. Nicholas Edwards: The hon. Gentleman has referred to the difficulties in the textile industry on a number of occasions in the House, and local authorities in the area have expressed concern about employment prospects.

Mr. Jones: Will the Secretary of State urgently consider locating a major job project in Flint, bearing in mind the recent loss of 7,000 steel jobs and the fact that Courtaulds currently employ only 1,000 people, compared with the post-war peak figure of 10,000? Is the right hon. Gentleman aware that Flint has a male unemployment rate of about 36 per cent., and that hundreds of young people are seeking jobs, often son against father? Is he aware also that the Deeside mill is fighting for its life, partly because of the Government's policy over the high pound, high interest rates and cheap subsidised imports?

Mr. Edwards: As the hon. Gentleman is aware, Flint is part of a wider travel-to-work area, so the overall rate is not as high as he indicates. I have just announced a major new programme of advance factories, 140,000 sq ft of which will be in the Deeside industrial park. There will be 50,000 sq ft at Wrexham and 30,000 sq ft at Bagillt. That illustrates that there is a major programme of advance factory building in that part of Wales. I remind the hon. Gentleman that the Point of Ayr project should provide useful assistance to the area, and I am sure that he will be glad to know that the British Celanese investment should secure employment in Wrexham.

Sir Anthony Meyer: Is my right hon. Friend aware that the problems to which the hon. Member for Flint, East (Mr. Jones) draws attention extend also to my constituency and are very grave? Is he further aware that the problems of the textile industry are exceedingly complex

and that demands from the Labour Benches for indiscriminate import controls are often unhelpful? Does my right hon. Friend accept that the export trade is valuable to this industry, and should be balanced against the threat from imports?

Mr. Edwards: My hon. Friend's comments confirm the importance of working under the existing GATT multi-fibre arrangement to control imports from low-cost sources. We have undertaken to ensure that those arrangements are implemented effectively and quickly.

Dr. Roger Thomas: Is the right hon. Gentleman aware that the footwear industry is also hard hit by the dumping of foreign products?

Mr. Speaker: Order. This question relates to the textile industry.

Lamb (Guaranteed Price)

Mr. Geraint Howells: asked the Secretary of State for Wales if he has any further plans to increase the guaranteed price for lamb in the current year; and if he will make a statement.

Mr. Nicholas Edwards: The fat sheep guarantee scheme will be replaced in the United Kingdom by the support arrangements to be provided under the recently negotiated Community regime. The arrangements for implementation are currently under discussion.

Mr. Howells: Can the Secretary of State tell the House whether the new scheme will come into operation in July, or whether our sheep producers will have to wait until August, September or October—that is, until the scheme is finalised?

Mr. Edwards: We should like the scheme to start in July, which was the date indicated during negotiations. However, it is a complicated scheme and has to be introduced throughout the whole of the EEC, and it is therefore in the hands of the Commission. It is important that the scheme should be introduced before the major autumn sales, as it will have important consequences for the market.

Mr. Best: Is my right hon. Friend aware of the strength of feeling among those engaged in sheep rearing in my


constituency about the need for early implementation of the scheme? Is he aware also that many of those farmers are receiving a smaller financial return from their sheep this year than they did last year? Will he consider the matter urgently?

Mr. Edwards: Yes, but the new scheme will help firm up the market and give it a strong future. I am sure that my hon. Friend will draw that to the attention of his farmers. I hope that he will also warn them of the dangers of delaying marketing their fat sheep, which could become overfat and either not qualify for the United Kingdom fat sheep guarantee or the EEC variable premium. There is a risk that some farmers will delay because of the new scheme, and thereby lose altogether.

Welsh Language Teaching

Mr. Hooson: asked the Secretary of State for Wales whether he has completed his consultations with the Welsh Joint Education Committee and other educational bodies regarding the place of Welsh in the school curriculum in Wales.

The Under-Secretary of State for Wales (Mr. Michael Roberts): No. Written comments on our consultative document have been offered by a number of bodies, and I shall be discussing this matter with representatives of the Welsh Joint Education Committee next month.

Mr. Hooson: Does my hon. Friend agree that if we are to have a proper place for the Welsh language in the school curriculum it is necessary to improve the standard of school books and other material in the language?

Mr. Michael Roberts: Yes. It was partly for that reason that we wrote into the Education Act a power to give specific grants to local education authorities. In administering the scheme we intend to give high priority to Welsh language books.

Mr. D. E. Thomas: Does the Minister accept that many of us strongly oppose the Government's proposal for a core curriculum? However, should he decide to implement such a proposal, we take the view that Welsh medium teaching should be part of that core in some form in all schools in Wales.

Mr. Michael Roberts: The linguistic pattern of Welsh throughout Wales is so varied that it will differ from one local authority to another. The point of the consultations is to ensure that Welsh plays an important part in the curriculum of our schools in Wales.

Sir Raymond Gower: Will my hon. Friend study particularly in his future consideration of this matter the availability of competent teachers of Welsh, particularly in those parts of the country where not so much Welsh is spoken?

Mr. Michael Roberts: We are concerned with the competent teaching of Welsh and every other subject.

Mr. Alan Williams: We welcome the extra specific grant, but is the hon. Gentleman sure that the strings attached to it will not be a deterrent? Is it correct that, to obtain the grant, local authorities will have to divert some of their existing programmes as their contribution? Will not that mean a further cutback in existing programmes in the education system, and is there not a risk that that will sour the attitudes of parents and education committees, who already resent the fact that 1 million fewer school books will be bought this year?

Mr. Michael Roberts: The problem of school books has been with us for a long time, and the right hon. Gentleman ought to know that. As for the questions raised recently by the WJEC. I shall be meeting the committee on 25 July and those matters will be discussed. We want to ensure that the new resources being injected will result, for the most part, in new initiatives. We do not want local expenditure by central Government expenditure.

Advance Factories

Mr. Best: asked the Secretary of State for Wales what is the current position on advance factory letting in Wales.

Sir Raymond Gower: asked the Secretary of State for Wales what is the current position with regard to the letting of advance factories in Wales.

Mr. Nicholas Edwards: This year 54 factory units totalling 453,700 sq. ft. had been formally allocated up to 20 June.

Mr. Best: Does my right hon. Friend agree that it is important to make sure


that there is adequate provision of small units and a great deal of education and help, particularly for those who are made redundant as a result of closures, so that they can find employment and make use of some of the small units?

Mr. Edwards: The Welsh Development Agency has included a considerable number of small units in its programme. There are nine small units available in Anglesey. As my hon. Friend is aware, the WDA has also had discussions with the National Coal Board pension fund about a major new initiative for the provision of small units.

Sir Raymond Gower: In view of the increasing size of the advance factory programme in Wales, will my right hon. Friend consider whether there might be a need to reassess the efficacy of the letting policy, the publicity and the agencies that bring the advantage of such factories to the attention of industrialists in this country and overseas?

Mr. Edwards: As my hon. Friend is well aware, that matter is being examined by the Select Committee. It would probably be right to await the comments of my hon. Friend and his colleagues on the agencies before taking further decisions. I can tell the House that there is still a great deal of interest in the factories. This year's performance is well up, and is on a par with 1978, when 100 factories were allocated and that was considered a good result at the time. It is a little down on last year, which was a record year, but, considering the present state of the economy, interest continues at a remarkably high level.

Mr. Rowlands: Is the right hon. Gentleman aware that no advance factory building programme can cope with another steel plant closure? Will he and the Government therefore assure the House and the people of Wales that they will not endorse any further plant closures in Wales, because Wales has been expected to suffer more than enough of the steel rationalisation programme? Is the right hon. Gentleman aware that the industrial and political patience of the Welsh people will run out rapidly if the Government continue on their present course?

Mr. Edwards: The hon. Gentleman is aware that the new chairman of the

BSC does not take over until tomorrow. He has not yet given the Government his assessment of the situation, and I am unable to comment on plans that have not yet been presented.

Mr. Alec Jones: Is the right hon. Gentleman aware that we are all bemused sometimes by the figures on factory building and the size of the units? Is he also aware that we are concerned to try to relate the 54 factories and the 450,000 sq. ft. of space to which he referred to the size of the problem facing us in Wales? Can the Secretary of State confirm, or deny, that the number of jobs likely to be created by the 54 factories is fewer than 2,000? Can he say whether those 2,000 are included in the 19,000 jobs in the pipeline about which we have heard much recently, or whether they are in addition to that figure?

Mr. Edwards: With the square footage that I am talking about, the number of jobs will be nearer 2,500 than under 2,000.

Mr. Alec Jones: The right hon. Gentleman has got it wrong.

Mr. Edwards: If the right hon. Gentleman wants precision on the matter, I can tell him that the number of jobs to be created is expected to be 2,390 from the 453,700 sq. ft. to which I referred. I stand by those figures.
We updated the figure for jobs in the pipeline from month to month. The figures that we are giving for jobs in the pipeline are the current ones.

Steel Industry

Mr. Roy Hughes: asked the Secretary of State for Wales if he has had any recent discussions with representatives of the British Steel Corporation to discuss the scale of redundancies in works in Gwent.

Mr. Nicholas Edwards: I last met the chairman and the chairman designate on 26 May. I discussed with them various matters relating to British Steel Corporation works in Wales.

Mr. Hughes: When will the Secretary of State inform his Cabinet colleagues that the Government's policies are creating chaos in Wales, particularly in our vital steel industry? If he cannot reconcile himself to speaking up for Wales, why does he not pack up?

Mr. Edwards: The latest Government policy has been to announce that we will guarantee the debts of the Brtish Steel Corporation, which would otherwise be bankrupt, and provide additional financial assistance if that is necessary when the new chairman of the BSC, who takes over tomorrow, has produced his assessment of the needs. We also made it clear that the new chairman must continue the essential task of making the BSC competitive, because it has to trade in a competitive world.

Sir Anthony Meyer: Will my right hon. Friend confirm that the money that the Government will have to produce to ensure the continued trading viability of the BSC has to come from somewhere, and that the Government must calculate whether the resources being pumped into the BSC are not taking away more jobs in other industries than they are likely to save?

Mr. Edwards: There can be no doubt that the loss in the previous financial year of £450 million and the news that the external financing limit of £450 million for the current year is likely to be exceeded by about £400 million must be directly destructive of jobs in other industries.

Mr. Abse: On Thursday the Secretary of State shocked the House by informing us that either another £400 million had to be found or the BSC would be liquidated. He said that on the basis of what he was told in a letter that he received on 6 June. The Secretary of State did the Select Committee the courtesy of appearing before it on 10 June.
Will the right hon. Gentleman tell the House the answer to this question: did he or did he not know, was he or was he not told, of that serious situation when he appeared before the Select Committee? If not—if he is being treated as a whipping boy or as a subordinate who is told nothing in the Cabinet—will he give an undertaking to the House that if Llanwern is closed he will maintain the dignity of his office by resigning from the Cabinet, as Wales would expect him to do?

Mr. Edwards: Presumably when the hon. Gentleman referred to a statement by the Secretary of State last week he was referring to the statement by my

right hon. Friend the Secretary of State for Industry, because I did not make a statement. It was clear—from the evidence given to the Select Committee—that the current position of the British Steel Corporation was extremely serious. All that my right hon. Friend did on Thursday was to come to the House, which is the right place to report these matters, tell the House the facts and announce that he would guarantee the debts of an organisation that would otherwise have had to be in liquidation.

Mr. Rowlands: Did the right hon. Gentleman know?

Mr. Best: Will my right hon. Friend have regular meetings with the new chairman of the British Steel Corporation so as constantly to monitor the situation to make sure that we are not expecting the corporation to run down its works too far, and to ensure that the prognosis for future demand is kept under constant review, so that that is a correct forecast, bearing in mind the difficulties of trying to look beyond any 12-month period?

Mr. Edwards: Every forecast made by the corporation over the past five years has proved to be grossly optimistic. I am sure that my right hon. Friend and my hon. Friend the Minister responsible, the Minister of State, Department of Industry, who is on the Bench with me will keep the closest eye on the forecast, but it must be said that the market is deteriorating very sharply.

Mr. Alan Williams: Does the Secretary of State realise that it must be a matter of the greatest concern to the House, and particularly to the Opposition, that four days after Sir Charles Villiers made his statement to the Secretary of State for Industry that a £400 million extra cash requirement was likely this year, he, the Secretary of State for Wales, apparently concealed that information from the Select Committee on Welsh Affairs, which he himself set up, or was unaware of the information at that time? Will he assure us that he intends not just to intervene, as in the past, but to fight for the Welsh plant, because there is no way in which we in Wales will accept the closure of Llanwern or Margam? If he fails to save those plants, the whole of Wales will expect his resignation.

Mr. Edwards: I concealed nothing from the Select Committee. I answered every question freely and fully. I do not concede for one moment that it is only right hon. and hon. Members on the Opposition Benches who have a concern for these matters. If they had a concern for them, they would have done well not to encourage the strike that has done so much damage to BSC.

House Building

Mr. Coleman: asked the Secretary of State for Wales what estimates are available to his Department of public sector and housing association housing starts in Wales for the three years 1980–81, 1981–82 and 1982–83.

The Under-Secretary for Wales (Mr. Wyn Roberts): As I said in reply to the hon. Member for Cardigan (Mr. Howells) on 25 June, I cannot make firm estimates, because within the single block housing investment allocation it will be for individual local authorities in Wales to decide what resources to use for new house building in 1980. As for future years, we must await their submissions of housing investment programmes later this year.
The number of housing association starts similarly will depend on the present and future plans of the associations.

Mr. Coleman: But is the Minister aware that in my constituency—

Mr. Bill Walker: Reading.

Mr. Coleman: I can read. Perhaps the hon. Gentleman cannot. I shall start again. The hon. Gentleman is simply wasting Welsh Question Time.
Is the Minister aware that in my constituency there have been no housing association starts this year? Any building going on was started two years ago. Is the hon. Gentleman aware also that local authorities have no money to start building houses, to give loans, or to give grants, except for those which are mandatory? Is the experience of Neath typical of Wales? What are the prospects for people waiting to be housed in Wales in the next one year, two years or three years? Can the hon. Gentleman say?

Mr. Wyn Roberts: I can tell the hon. Gentleman that the housing authority in

his constituency has this year had 80 per cent. of last year's grant, which is what it was promised by the previous Government in November 1978. It is one of 33 authorities which this year have had 80 per cent. of last year's grant. There are 14 other authorities in Wales that have had more than 80 per cent. of last year's grant. It is not simply new house building with which local authorities and housing associations are concerned. They are concerned also with rehabilitation, improvement for sale and the extension of home ownership.

Mr. Garel-Jones: My hon. Friend cannot give us firm estimates about the future, but can he give us some facts about the number of starts made from, say, 1974 to 1979 under the previous Government?

Mr. Wyn Roberts: I can tell my hon. Friend something about the record of the previous Government. Between 1974–75 and 1979–80 they cut the housing moneys in Wales by no less than one-third.

Mr. Alec Jones: The hon. Gentleman is very keen on mentioning the previous Government's commitment. Is it not true that the previous Government told local housing authorities in Wales that they could continue with their full programme and that the Government would finance them? Secondly, is it not true also that housing expenditure in Wales has been cut from £217 million in 1978–79, when only 5,500 houses were built, to £110 million in 1983–84? It is less than true to say that the hon. Gentleman cannot give some indication. A cut of that size must mean far fewer houses being built in Wales and longer waiting lists, and our homeless people waiting even longer.

Mr. Wyn Roberts: The right hon. Gentleman referred to the White Paper projections of expenditure up to 1983–84. I reiterate that between 1974–75 and 1979–80 his Government reduced housing expenditure in Wales from £303 million to £203 million. We are only continuing a course that was started by the previous Government.

Mr. Jones: Will the hon. Gentleman now answer the first part of my question? Is it not true that the last circular issued by the Labour Government committed the Government to financing the full housing programme of housing authorities in Wales?

Mr. Wyn Roberts: What the right hon. Gentleman's Government promised in the letter of November 1978 to the local authorities was that they would this year reeive 80 per cent. of the moneys granted last year.

Mr. Jones: And the rest. Go on.

Mr. Speaker: Order.

Mr. Roberts: There was also, admittedly, a tolerance factor. We have not allowed that tolerance factor, because we want the local authorities to adhere firmly to their cash limits.

Wales (Special Action Area)

Mr. Ioan Evans: asked the Secretary of State for Wales what proposals he has submitted to the European Economic Community for Wales to be designated as a special action area; and if he will make a statement.

Mr. Nicholas Edwards: I have given the Commission a pilot study covering industrial South Wales as part of its initiative on integrated operations.

Mr. Evans: Would it be possible for the details to be put in the Library, so that we may see what the Secretary of State has submitted? Does the right hon. Gentleman recall that Employment and Social Affairs Commissioner Vredeling said that he was disturbed to find such a massive rundown of the steel industry in Wales, in view of the repercussions that it was having on the coal industry and the general economy? What action will the Government take if nothing is forthcoming from Brussels?

Mr. Edwards: I do not think that it would be appropriate for the document to be placed in the Library at this stage. It is only a provisional draft document, one of a number that are passing between the Commission and the Welsh Office while the document is being developed. A copy is being passed to the Select Committee on Welsh Affairs, which has asked for it, so the hon. Gentleman will no doubt see it in due course.
All that I would say about the Commissioner's point of view is that it is the responsibility of those who have to run the British Steel Corporation to see that it is competitive in world markets. Putting off the evil day is in the long run

destructive of even more jobs and threatens the industry's future.

Mr. Hooson: Is my right hon. Friend satisfied that the administrative arrangements between the Welsh Office and the local authorities are adequate to ensure that we tap all possible European funds?

Mr. Edwards: Yes, Sir. I am sure that we are making full use of the resources available to us under EEC arrangements. I have in the past been critical of the quality of some of the schemes coming forward from local authorities. On the whole, they are improving, and there is an adequate supply, but we should always like to have an even wider choice of good quality schemes from the local authorities.

Mr. Barry Jones: The right hon. Gentleman talked of putting off the evil day. Will he appreciate that we in North East Wales hope that we have put behind us the worst of the steel redundancies, having lost 7,000 jobs? Can he give us an assurance that the jobs remaining at Shotton are safe?

Mr. Edwards: The hon. Gentleman knows that in an industry that depends, at the end of the day, on the markets. I cannot give any guarantee about the long-term future.

Mr. Budgen: When my right hon. Friend makes his statement, will he point out that any increased payments from the EEC will, inevitably and ultimately, be balanced by increased payments to the EEC?

Mr. Edwards: It might be to the advantage of this country if a larger share of the benefits of the EEC were to come into the form of industrial assistance that would be of benefit to this country, unlike some arrangements within the Community, that benefit other countries, but nor this country.

Local Authorities (Expenditure)

Mr. Anderson: asked the Secretary of State for Wales what discussions or other contact he has had with Welsh local authorities concerning over-spending; and what sanctions he has in mind to ensure compliance with his policy.

Mr. Nicholas Edwards: On many occasions, including meetings with the


Welsh Consultative Council on Local Government Finance, I have made it clear that local authority expenditure must be kept within the Government's expenditure targets. For England and Wales, the returns of local authorities' planned expenditure for this year indicated current expenditure well in excess of our target and my right hon. Friend the Secretary of State for the Environment and I have asked all local authorities to revise their budgets by 1 August. I trust that cooperation and good sense will prevail and sanctions will not be necessary.

Mr. Anderson: Will the Secretary of State confirm that Swansea and Afan are within the Government's penalty zone? Will he accept that the rate in the pound is no real guide to an authority's actual expenditure? Is not the Government's so-called rough justice no justice at all and a further example of the Conservative view that the man in Whitehall knows best—better than the local authorities?

Mr. Edwards: All that we are asking is that the local authorities should conform to the overall economic policies of the Government on public spending, as they have always done under previous Governments. I am sure that the hon. Gentleman will encourage his local authority to act in that way. If it has reduced its expenditure it will not be affected by any action—representing rough justice or not.

Mr. Delwyn Williams: Will my hon. Friend give an assurance that if local authorities in the South overspend yet again they will not be bailed out yet again at the expense of authorities, such as those in Powys, which have always obeyed every order to cut back and now face further cutbacks, which they cannot afford?

Mr. Edwards: The district authorities in Powys have a good record this year. Their rate increases are among the lowest anywhere. We hope that we shall be able to proceed on the basis that only a few serious offenders will have to be penalised under the powers available to us.

Mr. Alan Williams: Will the Secretary of State bear in mind that many Welsh local authorities, West Glamorgan and Swansea included, are experiencing falling populations at the same time as an

increase in the proportion of elderly in the population? Rate increases therefore become inevitable. At a time of soaring unemployment, how can he justify the use of sanctions and jackboot methods to withdraw money from areas that need more pumped into them?

Mr. Edwards: Because public spending is helping to kill productive industry and destroy jobs. There can be no excuse, at a time when the country needs to economise for local authorities in many parts of the country increasing their manpower.

Local Authority Rents

Dr. Roger Thomas: asked the Secretary of State for Wales what is the average rent for local authority dwellings in Wales; and by what percentage he expects it to increase by 1981.

Mr. Wyn Roberts: Provisional figures for 1980–81 show the average unrebated rent to be £8·04. The percentage increase by 1981 will depend on the decisions of local authorities taken in the light of any further Government guidelines, and within the framework of the new subsidy system which will come into operation in 1981–82.

Dr. Thomas: As the Minister is rather coy about predicting the percentage increase in rents, does he feel that it will be within the Government's inflation forecast for 1981, or will council house tenants be hit by more than average rises again this year?

Mr. Wyn Roberts: It was the Labour Government who restored the freedom to local authorities to fix their rents. While the Government have indicated guideline average rent increases to local authorities of £1·50 for 1980–81 and 60p from October 1980, in the context of the rate support grant settlement and the HIP allocation arrangements it is for the local authority to decide the appropriate level of increase for the tenants, taking into account the need to charge no more than is required to balance the expenditure falling on the housing revenue account after allowing for Government subsidies, contributions from the rate fund and provision for a reasonable working balance.

Mr. Best: Bearing in mind the small proportion that rents reflect in the total cost of provision of up-to-date local


authority housing, does my hon. Friend agree that it will be much cheaper in the long term for many council house tenants, when the Housing Bill receives the Royal Assent, to buy their council houses than to continue to pay ever-increasing rents?

Mr. Wyn Roberts: I agree with my hon. Friend that we want to encourage home ownership and council house sales. There is a significant demand for home ownership. The previous Government said that they intended to keep the rise in rents broadly in line with the rise in earnings. They failed to do that. We are trying to correct the situation.

Mr. D. E. Thomas: Will the Minister explain that, as a result of his Housing Bill and the abolition of the no-profit rule on housing revenue accounts, high rents for rentpayers will subsidise ratepayers?

Mr. Wyn Roberts: No. I disagree with the hon. Gentleman's view of the effect of the Housing Bill. On the whole, I think that the effect of the Bill will be largely beneficial. We acknowledge that, while there will always be people who want to buy their own homes, there will always be those who wish to rent their homes. The Government have increased the protection given to poorer tenants. We have recently increased the maximum rebate payable under the scheme from £10 to £23.

Unemployment Forecasts

Mr. Rowlands: asked the Secretary of State for Wales when he expects unemployment in Wales to exceed 100,000.

Mr. Nicholas Edwards: Very soon, I regret to say, if present trends continue.

Mr. Rowlands: It will continue to be 100,000—plus next month, and beyond that to perhaps 120,000 or 130,000. Does the right hon. Gentleman agree that, in these circumstances, it is nonsense to withdraw grants from special development areas and development areas in August 1980, given the enormous upward trend in unemployment and the large number of redundancies, amounting to well over 50,000 in the last 12 months, in the Welsh economy?

Mr. Edwards: I am sure that it is right to concentrate grants on areas that need

them most and where the unemployment figures are at their highest.

Sir Anthony Meyer: Does my right hon. Friend agree that if employers in Wales had flexibility over wage levels—which is rendered impossible by nationally bargained increases—it would be substantially easier to attract industry to Wales?

Mr. Edwards: I am certain that in many industries excessively high wage settlements have destroyed jobs.

Mr. Roy Hughes: Does the Secretary of State appreciate that if the puny efforts at factory building in the Newport area are anything to go by, together with the parsimonious attitude of the Government in not granting the town special development area status, Newport is likely, in the not-too-distant future, to be a major contributor to that magical figure of 100,000 unemployed?

Mr. Edwards: We have allocated a major part of the £48 million package to the Newport area and to the Cwmbran area that helps to serve it. I have announced this afternoon a substantial extension of factory building and site provision for Newport.

Mr. Hooson: Does my right hon. Friend agree that failure to tackle the problem of inflation would be a guarantee of even worse unemployment figures?

Mr. Edwards: I am certain that if inflation is not tackled, in the long run the unemployment figures will be even higher. Tackling that problem remains the top priority of the Government.

Mr. Alec Jones: Does the right hon. Gentleman agree that he has just confirmed that under him unemployment in Wales has risen by about 19,000 in one year? If that is a measure of his contribution to Wales, it is one that we could well do without.

Mr. Best: What did the previous Government do?

Mr. Jones: A lot better. Does the right hon. Gentleman agree also that the changes in regional policies announced by the Government last June—partially relieved for Llanwern and Port Talbot by the fiddling extra pieces announced for the Port Talbot and Llanwern steel


closure areas—are inadequate to meet the crisis which has now spread to the whole of Wales, not only in steel closure areas but in North Wales, South Wales and Mid-Wales? Has the right hon. Gentleman seen the Manpower Services Commission's review for 1980, which indicates that the proportion of unemployed under the age of 19 will be 20 per cent. in many parts of Wales? What on earth does the right hon. Gentleman intend to do for those young people?

Mr. Edwards: I find it hard to take lectures on unemployment from a member of the Government who more than doubled unemployment in Wales. There were years during which the right hon. Gentleman was responsible for this matter when the figures were quite as bad. Indeed, they have not yet risen to the highest figure that we suffered under his Government.
As for the right hon. Gentleman's suggestion that we should extend to the whole of Wales the highest levels of grant and assistance, he must realise that if we followed that principle throughout the United Kingdom we should have indiscriminate subsidies, which would bring no benefit to the areas which most needed it. If the right hon. Gentleman thinks that that makes a coherent form of industrial policy, he must be capable of believing anything.

Mr. Rowlands: On a point of order, Mr. Speaker. In view of the utterly complacent view of the Secretary of State about unemployment in Wales, I beg to give notice that I shall raise the matter at the earliest opportunity on the Adjournment.

Oral Answers to Questions — FILM INDUSTRY

Mr. Dormand: asked the Chancellor of the Duchy of Lancaster what steps he is taking to promote the appreciation of films.

The Under-Secretary of State for Education and Science (Mr. Neil MacFarlane): The British Film Institute promotes film as an art form and receives substantial support from public funds for this purpose. The parliamentary grant-in-aid which I have proposed for the current year should enable the institute to maintain a level of activity

broadly comparable with that of last year.

Mr. Dormand: In view of the inadequate provisions in the Films Bill, to which presumably the hon. Gentleman refers and which went through the House recently, does he not feel that he has an ever greater responsibility in this matter? Indeed, nothing has been done since the Government came to power. Is it not a fact that the cinema, of all the arts, attracts more customers than any other aspect of the arts? Will he give special attention to the regional film theatres and the Children's Film Foundation?

Mr. MacFarlane: The grant-in-aid for the British Film Institute announced recently is £5·67 million, as against £4·5 million for last year. As for the concentration of the Government's links with the British Film Institute, it must remain the prerogative of Ministers not to interfere with the British Film Institute in the course on which it chooses to embark. However, the regional arts associations link up with the British Film Institute, and I have no doubt that some of the hon. Gentleman's comments will be read by the various representatives of those authorities.

Mrs. Dunwoody: Is it not true that what is happening is that the money allocated to the British Film Institute is not being spent in the same proportion in the regions as was once the case? If they are not given adequate grants, will they not find it very difficult to maintain regional film theatres?

Mr. MacFarlane: It is interesting to note that the British Film Institute has set up an advisory committee on funding and development, with the main objective of trying to obtain further funds from private sources. I have no doubt that the hon. Lady, who has some interest in these matters, will choose to give her assistance to that source of fund raising.

Mr. Faulds: Would not British films flourish and prosper much better if responsibility for them were taken from the Department of Trade and put under that of the Chancellor of the Duchy of Lancaster? Will the hon. Gentleman make representations to his colleagues to bring about that necessary and healthy change?

Mr. MacFarlane: I am certain that my right hon. Friend the Chancellor of the Duchy of Lancaster will feel considerably warmed by the esteem in which the hon. Gentleman holds him. The British Film Institute is the only agency that comes under the general direction of the Office of Arts and Libraries. The National Film Finance Corporation comes under the Department of Trade, and in that respect I could not give any assurance to the hon. Gentleman today.

Oral Answers to Questions — ARTS (SPONSORSHIP)

Mr. Dalyell: asked the Chancellor of the Duchy of Lancaster if he will make a statement on his discussions with leading figures in the City of London on the financing of the arts.

The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): I have had discussions with the chairman of the five London clearing banks about increasing their sponsorship of the arts and about the possibility of setting up a clearing banks foundation for the arts with an endowment, the income from which could be used to provide support for artistic events.
The banks assured me that they are already spending large sums on support for the arts, that they were planning to increase their efforts, but it was important to them, as competitive enterprises, to decide for themselves how they used their money.
I found these discussions very useful in clarifying the position of the clearing banks and in explaining to them the Government's policy of encouraging an increase in private sector support for the arts.

Mr. Dalyell: Did the right hon. Gentleman ask for £500 million? In the light of the profits that the banks are making, and are likely to make, in these inflationary times, should they not either show some public benevolence along these lines—and not only in relation to the arts—or submit themselves to the kind of tax that the oil companies have had to meet with the petroleum revenue tax?

Mr. St. John-Stevas: I did not ask them for £500 million, as was erroneously reported in The Times under the byline

of Mr. or Miss Roman Eisenstein. It was an inaccurate report. I do not know where it came from.
I was satisfied that the banks were making a considerable contribution to the arts. They concentrate on different spheres of activity—Lloyds, for example, on schoolchildren and young people; the Midland on certain major projects such as the Royal Ballet touring company, the Big Top, the York mystery plays and the Covent Garden proms; Williams Glyn on the North-West; and Barclays on rescuing D'Oyly Carte. I was satisfied, as a result of these conversations, that they would increase their support materially for the arts. This made the approaches very well worth while.

Mr. Fell: Will my right hon. Friend bear in mind the splendid work of that child of the City, the City and Guilds College? Will he visit the establishment, which lies only five minutes by car from the House of Commons, and give it all the support that he can?

Mr. St. John-Stevas: I agree with my hon. Friend that it is an excellent institution which does very good work for the arts. He suggests that I visit it. I shall be delighted to do so if it happens to ask me.

Mr. Arthur Lewis: During the right hon. Gentleman's discussions with these eminent gentlemen about grants, and so on, did any question come up about giving further grants to that wonderful theatre at Stratford, which currently has a marvellous show which originally was entitled "Ditch the Bitch"—the title has now been changed? Did he discuss that, because everyone is talking about it and saying how necessary it is to give the theatre more money?

Mr. St. John-Stevas: The hon. Gentleman and I must move in different circles. No one is talking to me about that play. Certainly I did not raise the matter with the banks. That was probably just as well, since I have never seen such unanimously bad notices for a play as that one received.

Oral Answers to Questions — MUSEUMS AND GALLERIES(CHARGES)

Mr. Nicholas Baker: asked the Chancellor of the Duchy of Lancaster if he will now consider the introduction of


charges for admission to museums and galleries so as to preserve standards in times of economic difficulty.

Mr. St. John-Stevas: No, Sir.

Mr. Baker: Will my right hon. Friend not accept at face value the views of the artistic establishment on this one, bearing in mind the success of "The Vikings" exhibition at the British museum, the fact that people generally value what they pay for, and that foreign visitors, to whose museums we make a substantial contribution when we go to their countries, would be prepared to pay? Does not my right hon. Friend see that a system of charging might provide a means by which works of art which might otherwise leave the country can be bought for the British public?

Mr. St. John-Stevas: I am sorry that I cannot agree with my hon. Friend, but I am not sorry about the substance of the disagreement. That is a distinction which hon. Gentlemen will immediately see.
We have been round this course before and I do not wish to go round it again. It is open to local museums to charge if they so wish, and it is open to the national museum to charge for special exhibitions—such as "The Vikings" exhibition—if it wishes to do so. It must be left to them. I have no intention of introducing general charges for museums.

Mr. Faulds: Will the right hon. Gentleman accept that he will have the total support of the Opposition in opposing the reintroduction of museum charges, which lower attendances and damage the public purposes of museums and galleries?

Mr. St. John-Stevas: That expression of support gives me no reason to change my mind.

TEXTILE INDUSTRY (LANCASHIRE)

Mr. Straw: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the mounting crisis in the Lancashire textile industry.

My immediate reason for raising this matter today is the announcement on Thursday last of the redundancy of 91 workers at the Mossbridge Yarns mill in Blackburn following the announcement 10 days ago of 90 redundancies at the Waterfall mill in Blackburn. Many of those made redundant are my constituents.
Given the scale of redundancies across the whole of industry, I can understand that 180 redundancies declared in one town may appear not to be a sufficient reason for moving the Adjournment of the House, but because of the organisation of the textile industry into relatively small units and factories, individual redundancies and closure applications rarely involve more than 200 or 300 jobs at any one time. Therefore, there never will be a day, given the nature of the industry, when one can point to 5,000 jobs going in a single, dramatic announcement as, for example, can happen in the steel industry.
What I can point to, however, is the fact that 9,000 jobs have been lost in the textile industry since Christmas. One-fifth of the Lancashire textile industry has been wiped out in six months. When I made a similar application on 6 May, job losses stood at 4,500, with 20 mills having been closed. Now, almost two months later, the total stands at 9,000 lost jobs, with 53 mills closed. In Blackburn last month unemployment went up by 1,000 in four weeks.
The importance of the issue, Mr. Speaker, is obvious. Sixty thousand people depend for their livelihood on employment in the Lancashire textile industry. According to the Financial Times, half those jobs are at risk if present conditions persist.
The urgency of the situation is that unless firm Government action is taken more and more jobs will go. That point, as I am sure you will understand, Mr. Speaker, is well illustrated by what has already happened in the industry over the last two months.
As the Leader of the House knows only too well, we have repeatedly asked him for a debate on the textile crisis and, while sympathy from him has been in abundance, no action has followed. The only way we shall get a debate on this issue, I think, is by an emergency application being granted under Standing Order No. 9.


Death can come just as surely by a thousands cuts as by a single bullet. The Lancashire textile industry is suffering a slow but sure death through the Government's complacency and inaction. I respectfully beg of you, Mr. Speaker, to grant this application.

Mr. Speaker: The hon. Member for Blackburn (Mr. Straw) gave me notice this morning before 12 o'clock that he would seek leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that he believed should have urgent consideration, namely,
the mounting crisis in the Lancashire textile industry.
The hon. Gentleman has drawn the attention of the House to a very serious matter. He has submitted many facts to us. He knows, and the House knows, that I do not decide whether the serious issues to which he has referred shall be debated. I merely decide whether they should take precedence over the business for tonight or tomorrow.
As the House, knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the Standing Order but to give no reasons for my decision. I listened with anxious care to the hon. Member, but I must rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

WELSH AFFAIRS

Motion made, and Question proposed,
That the matter of the Welsh language, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for their consideration.—[Mr. St. John-Stevas.]

Mr. Heffer: On a point of order, Mr. Speaker. I should like to ask for your guidance before we pass the motion. The motion says that the matter of the Welsh language is one "relating exclusively to

Wales." I do not know what to do about the motion, Mr. Speaker. I do not wish to object, and I do not wish this matter not to go to the Welsh Grand Committee. However, I do not believe that the Welsh language is exclusive to Wales. I went to Liverpool university in the evenings to study Welsh language and Welsh history. Therefore, the Welsh language is not a matter exclusively for Wales.
I am not certain what I should do. I do not want to object to the motion, because I believe that the matter should go to the Welsh Grand Committee. Perhaps you, Mr. Speaker, as a Welshman, can help me.

Mr. Speaker: I am much obliged to the hon. Member. I confess that I had not realised that he had been to Liverpool university in the evenings to study Welsh. However, the wording of the motion follows exactly the wording of Standing Order No. 7 (52).
It is, therefore, in order to put this matter before the Welsh Grand Committee, rather than to say that it is not of interest to other hon. Members, that it is worded in that way. I will put the motion to the House.

Question put and agreed to.

CIVIL AVIATION [MONEY] (No. 2)

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act of the present session to provide for the reduction of the public dividend capital of the British Airways Board, the subsequent dissolution of the Board and the vesting of all its property, rights, liabilities and obligations in a company nominated by the Secretary of State and to amend the Civil Aviation Act 1971, it is expedient to authorise any increase in the sums issued out of or paid into the Consolidated Fund or the National Loans Fund which is attributable to provisions of that Act setting a limit of £200 million on the aggregate amount outstanding in respect of the Civil Aviation Authority's initial debt and of the principal of any money borrowed by the Authority.—[Mr. Cope.]

Orders of the Day — CIVIL AVIATION BILL

As amended (in the Standing Committee), considered.

Mr. John Smith: On a point of order, Mr. Speaker. I should like to make a minor point about the selection of amendments. Amendments Nos. 6 and 7, in the names of myself and my hon. Friends, are grouped together. It so happens that amendment No. 54 raises the same point. I think it would be for the convenience of the House if amendment No. 54 were grouped with amendments Nos. 6 and 7. I understand that the Government have no objection to my proposal, which should shorten our debate.

Mr. Speaker: Those words always appeal to me.

The Under-Secretary of State for Trade (Mr. Norman Tebbit): I beg to move,
That the order in which proceedings are taken shall be New Clauses 5 to 14 and 16 and 17, amendments to clauses 1 to 9, amendments to schedules 1 and 2 and to part I of schedule 3, new clauses 3, 4, 15, 18, 2 and 1, amendments to clauses 10 to 25, new schedules, amendments to part II of schedule 3 and amendments to the title.
I think that this will be for the convenience of the House. The wording of the motion is different from that of the motion on the Notice Paper. The alteration has the agreement of the Opposition.

Question put and agreed to.

New Clause 5

NOMINATION OF DIRECTORS OF SUCCESSOR COMPANY

"Pursuant to the provisions of section 2(2) to this Act the Secretary of State shall nominate at least two non-executive directors of the successor company".—[Mr. John Smith.]

Brought up, and read the First time.

Mr. John Smith: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this we may discuss new clause No. 14—Appointment of Non-Executive Directors of Successor Company.

Mr. Smith: The new clause ensures that the Government shall nominate at least two-non-executive directors to the board of the successor company to British Airways. New clause 14, in the name of the hon. Member for Brentwood and Ongar (Mr. McCrindle), has much the same effect.
The Bill, which we opposed strenuously on Second Reading and in Committee, is dangerous and foolish. It seeks to change British Airways from being a successful public corporation into a private sector company. However, the Government say that they do not wish to sell 100 per cent. of the shares. They do not wish to dispose of all their interests in the successor company. Indeed, they say—and we have only ministerial assurances, for what they are worth—that they will retain 51 per cent of the shares.
The Government propose to sell up to 49 per cent. of the value of British Airways to the private sector. We do not know yet what proportion they will sell, nor, therefore, the proportion that they will retain. We do not even know whether they will carry through the exercise. All the signs are that if they attempt to float shares in the reasonably near future the valuation accorded by the market to them will be so low as to be a gross undervaluation of British Airways. That would constitute a substantial fraud on the taxpayer. We have grave doubts about whether the proposal will be carried through. However, we must proceed on the assumption that the Government will go ahead with the operation.
Our case is that at least two of the directors of the successor company should be appointed by the Government. In Committee we opposed the sale of shares at all. We also argued that a majority of the directors should be nominated by the Government because the Government will continue to own the majority of the shares. Our present proposition is modest.

Mr. Russell Kerr: It is modest enough.

Mr. Smith: It is extremely modest. Our original proposition was that the majority of directors should be appointed by the Government, but we would really like the Government to abandon their foolish policy.
Let us consider the Government's proposition. They will retain 51 per cent. of the ownership of the successor company, but they plan to have no directors on the board which will run that company. The Government say that they do not want to interfere in the running of the company, although they will be the majority owners. It is a startling proposition that the majority shareholders in a company should, before the company is set up, say that they will have nothing to do with the appointment of directors. Can anyone imagine a private sector holding company saying "We own 51 per cent. of the company but we do not want anything to do with it. In fact, we are so keen on having nothing to do with it that we shall not have even one director on the board to look after our interests"?
If the successor company comes into existence, the British public will have a majority ownership. I do not know how long that position will be maintained. That is one of the reasons why we want at least one director on the board to look after the substantial British interest and investment. It is a startling and monstrous proposition that the British public owning 51 per cent. of the shares should not have even one director on the board that controls that investment.
When that argument was put to the Secretary of State on Second Reading, he was, as is often the case, hopelessly confused. He did not seem to understand precisely what the Government plan to do with their majority shareholding. We pursued the issue carefully in Committee. All that we heard from the Under-Secretary of State was that in extreme situations, such as if the minority shareholders want to get rid of the whole board, the Government might step in and use their majority votes at the annual general meeting.
The Government are standing back and handing over control of the company to the private sector minority. If the Government sold the majority of the shares it would be unreasonable to deny that majority section control of the board. However, not only is there to be a fraud on the public in terms of the asset value to be obtained for British Airways, but there is a startling twist in the public sector versus private sector argument, namely, that the public sector is to divest itself of all con-

trol, even though it owns a majority of the shares. The proposition is so startling that it is almost unbelievable that any Government would have the face to propose it.
The Government are using the same device and selling off shares in British Aerospace, but two Government directors are to sit on the board. A distinction is being made because British Aerospace is a major Government defence contractor. It is a difference, but it does not explain why one company should have two Government directors and the other should not. The Secretary of State for Industry, who obviously does not keep in close touch with the Secretary of State for Trade, said that it was a good idea to have two outside directors on the board of a company. That does not appear to strike the Secretary of State for Trade as having any value.
The Government propose not only that the assets should be sold but that the whole control of the company should be given to the private sector, even though it will hold a minority shareholding. That is an outrageous and monstrous proposition to which Parliament should not assent.

Mr. Michael Colvin: The right hon. Gentleman refers to the whole control of a company. He is a lawyer and he probably understands such matters better than I. What does "whole control" mean? He insinuates that 51 per cent. of the shares necessarily gives "whole control". Surely whole control of a company can be in the hands of a group with a much smaller proportion of shares.

Mr. Smith: That is correct. There would be a case for having Government directors on the board even if the Government held fewer than 51 per cent. of the shares. With 51 per cent. of the shares being in the Government's hands that merely strengthens the case for having Government directors. Shareholders can have effective control of a company with fewer than 51 per cent. of shares if they control the largest voting block. There might also be provisions in the articles of association of a company giving particular rights to certain classes of shareholders. Perhaps the hon. Gentleman can explain how anyone with 51 per cent. of the shares in an undertaking can


say that he does not want to have anything to do with running it. The directors will be in charge of the day-to-day running of the company.
The Government are giving away control of British Airways, our most import ant flag-carrying airline with the largest network of international routes in the world, to a minority, private sector holding. That is a fantastic proposition.
British Airways has been developed to its present international position not only by the skill of those who run it but by substantial public investment. What is likely to happen to the new company? We are suspicious of the Minister's assurances that the Government will retain a 51 per cent. holding.

Mr. Tebbit: We have given no such assurance.

Mr. Smith: In Committee there were many references to the Minister proceeding on the assumption that the Government will retain a 51 per cent. holding. If he cannot even assure us of that, the position is even more serious.

Mr. Tebbit: I think that I made it perfectly plain in Committee that it was the present policy of Her Majesty's Government to hold 51 per cent. or more of the shares but that that policy was not guaranteed by me or any of my colleagues to continue indefinitely.

Mr. Smith: The Under-Secretary is saying that he cannot inform us what the Government's policy will be in the next few months. I thought that his position was that for the life of the Government they would retain a 51 per cent. shareholding, but perhaps the hon. Gentleman has taken a U-turn, a Z-turn or a W-turn, or whatever other manoeuvres are carried out by the Government, and he feels unable to assure us on that score. His statement this afternoon provides an added reason for having Government directors on the board of the new company. If the Government are so uncertain about whether they want to keep control of the company, that is all the more reason for their having directors to superintend it.

Mr. Tebbit: I cannot see what all the fuss is about. I can understand the right hon. Gentleman's point of view. He put

it in Committee. I cannot understand why he should think that my view has changed or that anything I have just said differs in any way from what I said in Committee. It does not.

Mr. Smith: I am always a believer in the possible repentance of the sinner, and I had thought that in the time since we considered these matters in Committee some of these important matters would have dawned on the Under-Secretary. As is often the case, I was unduly generous in my hopes for the hon. Gentleman. I was wildly and unreasonably optimistic, and I apologise for having given the hon. Gentleman the benefit of the doubt in this matter, because it was clearly something that he is not pleased to have.
We therefore do not know what the Government will do with their shareholding. If they cannot tell us, even for the life of the Government, that they will maintain the 51 per cent. holding, when will they make up their minds? Will they change their policy of holding 51 per cent. within the next six weeks, the next year or the next 18 months? There will be hopeless uncertainty surrounding the issuing of shares in the company, and potential investors will want to know the Government's policy. The Under-Secretary had better be able to tell them more than he has told us so far, either in the House or in Committee.
We are very suspicious about what is going on. The whole idea has been sold to the public on the basis that the Government are selling off a minority of shares to the private sector and on the basis that there will be certain assurances for the airline employees and everyone else on the basis that, although the Government will not control events, they will hold a majority shareholding. As anyone who knows the airline industry is aware, it is going through difficult and troubled times. The profit and loss accounts and the balance sheets of the major world airlines, most of which are located in the United States, indicate the extent of the trouble. They have been caught between falling prices and rising fuel costs. It has been extremely hard for any airline to achieve profitability. This fact applies to British Airways and all other British companies be they in the public or private sector, as well as to international organisations.
British Airways faces an added complication in that it is about to embark upon one of the most important re-equipment programmes in its history. It is phasing out the noisier aircraft for the quieter aircraft that are on order. The vast programme is expected to cost about £2·5 billion. However, total uncertainty will be created by the manoeuvre in which the Government are engaged because the Government guarantee on borrowing, which applies automatically to a public corporation, will be withdrawn.
If the company's assets are seriously undervalued, as there is a danger they will be, when the shares are sold the whole of this borrowing programme—not all the money will be borrowed, since a substantial amount will come from the airline's resources—will be put at risk. If that happens and the company finds it difficult to carry out its buying programme, it may have to consider the possibility of realising some of its assets to produce the cash it needs. That is when we become most concerned about what will happen to some of the profitable subsidiary activities of British Airways.
I have in mind particularly the helicopters division which is extremely successful and profitable and is one of the major carriers between production bases and platforms in the North Sea. Two major operators are engaged in this business, Bristow, the private sector company, and British Airways. I believe that British Caledonian also intends to participate. It would be scandalous if the British Airways helicopters subsidiary were sold off to be gobbled up by a private sector competitor. It is a profitable undertaking, which is efficiently run. Its sale would be a shocking example of the Conservative policy of selling off State businesses that make a profit while leaving those that do not to be carried by the taxpayer.
We see that policy in operation across the board. My guess is that the proposals that the Government are likely to make for the British National Oil Corporation may be the most scandouous of all when they will seek to get rid of important public assets to the private sector. We see the policy in operation in other transport undertakings as well.
In order to forestall such an event it would be most useful to have Government directors on the board who could speak up for the public interest because

this 51 per cent. shareholding which the Under-Secretary will not guarantee is open to be raided at any time, especially since the company will be controlled by the minority shareholding interest. In these circumstances it would seem to us only prudent to have the protection which two Government directors would provide. It would not be complete protection, I agree, but those directors would be able to speak up about what was happening if such a raid on the company's resources were contemplated by the Government.
In addition, there is a perfectly reasonable case for having Government directors. They are present in other public corporations. The BNOC, with the establishment of which I was involved in a previous capacity, has two civil servants on the board, one from the Treasury and the other from the Department of Energy. That arrangement works extremely well and I see no signs of the Government changing it. There are other areas where the Government, having a stake in the business, insist on representation on the board. I know that the hon. Member for Brentwood and Ongar believes that there is a lot to be said for having non-executive directors on the board, particularly when there is a substantial public investment in the company.

Mr. Cranley Onslow: I am not sure that the right hon. Gentleman is strengthening his case. If he is suggesting that it would be a good idea to have two civil servants on the board of British Airways I do not see how he could regard them as being ideal custodians of the public interest against the supposed preferences of the Government for whom they would be working.

Mr. Smith: The hon. Gentleman should listen more carefully, because I was not developing such a case. He has set up an Aunt Sally that needs no knocking down. The hon. Gentleman knows perfectly well that I referred to the innovation in another public corporation—BNOC—on the board of which sit two civil servants. The most important factor is to ensure that there are directors on the board who do not represent the minority shareholding group.
One wonders what harm there could conceivably be in having Government


directors on the board, why the Government have so resolutely set their face against this proposition. In Committee I thought that this was a point on which they might have given way, because it would not run a coach and horses through the Bill. In addition, it was an arrangement that the Secretary of State for Industry had proposed for the new British Aerospace company. There cannot be great difficulties in operating in that way because the Department of Industry thinks that it will be able to work perfectly successfully with two Government directors on the board of British Aerospace.
Throughout the Committee stage we heard not a single argument from the Government that it would be difficult, awkward or undesirable to have Government directors on the board of the new company. This thoroughly bad idea in principle is offensive to any conception of equity when a minority shareholder is given total control over the board. Any motion that this is some attempt to fund some new middle way between total public ownership and total private ownership is subverted by the proposition that the private sector will gain control for less than half the money. That is what it amounts to, and it is a ridiculous proposition.
4 pm
Guardians are needed because we cannot trust the Government. The Under-Secretary made that crystal clear in his intervention. They do not know whether they want 51 per cent. They know that for the next week or so, but they have no idea what will happen after that. It is a serious issue when the control of the company is at stake. Consider all that is invested in the company—all those who have committed their lives to the company at all stages of management, staff and work force. Their future may depend upon the whim of the Under-Secretary or his senior colleagues, who are in such a state that they do not know whether they want to keep 51 per cent. That is all the more reason why they should have people on the board to whom they can look as the guardians of the public interest. They would be Government directors.
We would like a majority of directors. That is the only equitable solution to the

problem. As we do not have a majority in the House we are prepared to settle for something less than that. We may not even achieve that, but if we fail to do so it is because the Conservative Party is not willing to listen to reason, but is prepared to drum the Government's proposals through the House by use of the force of the majority rather than by an appeal to the reason of the House.

Mr. R. A. McCrindle: During the 10 years that I have served as a Member in the House the number of occasions on which I have found myself in substantial disagreement with the leadership of my party is extremely small. But I must say that on this occasion, as will be deduced from the fact that I have tabled new clause 14 in similar terms to new clause 5 moved by the right hon. Member for Lanarkshire, North (Mr. Smith), I find myself in substantial agreement with the argument that there should be some element of involvement by Government-nominated directors in the successor company.
Perhaps I could claim some small benefit from the fact that, when the Opposition originally tabled their amendments in Committee, it was their wish to have a majority of all the directors appointed by the Secretary of State and at that time I put forward a similar proposition to that which I am putting forward today. Perhaps I could claim that the new clauses owe more of their parentage to the argument which I consistently deployed than to the Opposition arguments.
I noted that the right hon. Member for Lanarkshire, North engaged in an assessment of almost the whole purport of the Bill while moving a new clause that has a relatively small significance in relation to the total. I do not intend to follow his example, although I agree with the idea of appointing directors via the Secretary of State. I do not accept some of his wider suggestions about what is likely to happen if and when the Bill is enacted. He had basic doubts that the Government would carry through the aims and objectives of the Bill. I have no such doubts. Nor do I wish that that should be so. The difference between the right hon. Gentleman and myself is that I approve of the general aim of part I of the Bill. I hope that it will lead to considerable


success in the injection of private capital into the successor company. The Opposition and myself part company there. I wish to see a successful company take over from British Airways.
That would be better achieved if there were two nominees of the Secretary of State on the board. I accept that the airline industry is going through troubled times. I concede that the timing of the launching of the shares will be absolutely crucial. I also concede that for the next year or so it will be extremely difficult to achieve a successful launching of the minority shareholding which is to be offered to the public. That leads the Opposition to the conclusion that we should abandon the whole project. I do not reach the same conclusion. The timing is critical—and that is not a new conclusion for me. On Second Reading I indicated some concern that the timing chosen might be dictated more by political factors than by economic factors, and that that would not be in the best interests of succeeding in what the Government and I are united in attempting to achieve.
I wish this measure success. I remind the House that it is not intended to be a full denationalisation measure. The objective of this part of the Bill is not to sell off British Airways but to inject an element of private capital participation into a new limited company. I stress that because it is an extremely important point. Surely I am correct in saying that the objective of the Bill, no matter what may be the objective of any successor Bill which may be introduced even within the lifetime of the present Parliament, is not to denationalise British Airways but merely to inject an element of private capital into a limited company. It would be wrong not to continue participation on the board of directors on behalf of the majority shareholders. Because the majority shareholding will be retained by the Government they are in duty bound to represent the majority shareholders—in other words, to represent the taxpayers who are the majority shareholders—in one fashion or another.
One of the better ways of ensuring that the taxpayers' interests continue to be borne in mind by the new company would be for the Secretary of State to appoint two directors. They would not take part in the everyday running of the new company, as that would be at variance with

the Government's proposals, but they would be non-executive directors simply and solely representing the taxpayers who continue to own a majority of the company.

Mr. Colvin: I follow my hon. Friend's argument, but if the Secretary of State is to retain in excess of 51 per cent. of the shareholding in the new company, and it is the shareholders who elect the directors, he could use his power as the majority shareholder to elect whom he wishes to the board. Why does that have to be written into the Bill as is suggested in new clause 14?

Mr. McCrindle: It was perhaps unfortunate that my hon. Friend did not have the privilege of serving on the Standing Committee on the Bill. If he had, I think he would have heard my hon. Friend the Under-Secretary of State say on more than one occasion that it was the Government's intention merely to allow the shareholders to appoint the directors. If I read that correctly, that is another way of saying that, without necessarily involving himself as the majority shareholder on behalf of the taxpayer, it was a perfectly conceivable—in fact, expected—result that the minority shareholding, that is to say, a maximum of 49 per cent., would be left to appoint the directors.
If I am correct in saying that that is the position that has been outlined by my right hon. Friend the Under-Secretary of State, I imagine that perhaps I am on the point of obtaining my first convert, at least on the Government Benches, because clearly the point of my hon. Friend's intervention would not then apply.

Mr. Onslow: My hon. Friend will recall that he and I did not agree in Committee on much of this, and I shall not bother him by rehearsing those arguments in an intervention. He has stated the case as he sees it for there being two people on the board of the new company simply and solely because the Minister puts them there to protect the taxpayers' interest. Will he tell us what sort of people he has in mind as being selected for this purpose, and precisely what their instructions from the Minister would be?

Mr. McCrindle: That is a somewhat astonishing intervention. The Secretary of State should first have the power to


make the appointments. Then, as time goes by, any Government change of policy should be reflected in what those people say, because they are continuing to represent the 51 per cent. shareholding and the taxpayer. It is right that we should leave the Secretary of State to make the appointments and then from time to time to inspect the appointees, so that they may reflect Government policy in relation to British Airways as it develops.
I can think of no company of any sort where the majority of the shareholders are not represented on the board of directors. I do not have to look just at private companies; I can look at public corporations. I look not only at the example given by the right hon. Gentleman, namely, British Aerospace, where there are indeed to be two appointees of the Government as non-executive directors. I look considerably into the past and I recall that since 1918 British Petroleum has been in a position not dissimilar to that proposed under the Bill for British Airways. Unless I am very much mistaken, since that time the British Government have appointed one or two persons to the board of British Petroleum, and, pace the intervention of my hon. Friend the Member for Woking (Mr. Onslow)—who had left the Chamber but has just returned—I cannot recall a major occasion on which it has been suggested that those two people were necessarily the puppets of the Government nor that their presence on the board of British Petroleum necessarily prevented British Petroleum from carrying out its objectives and becoming one of Britain's more prosperous companies.
I do not think it at all acceptable that we should have either a private company or a corporation of a mixed type such as is proposed here under the name of British Airways Limited. I simply do not believe that it is correct that there should be no representation on the board of any sort.
4.15 pm
I may be told that British Aerospace is a different matter because there are defence involvements. I may be told that British Petroleum is something that happened a long time ago, and that, if we were creating British Petroleum now, we would not appoint non-executive

directors, in which case I would perhaps contrast the position not with that of other British companies but with other airlines where there is an element of Government involvement on behalf of the taxpayer.
I am not here speaking of some small airline in some small country. I am speaking of European airlines of such strength and importance as Lufthansa, SAS, Alitalia, Swissair and KLM. To some degree or other, in all these cases there is an involvement by the Government on behalf of the taxpayer, and in all the cases, as far as I have been able to ascertain, there is a representation on behalf of the taxpayer, through the appointment of the responsible Minister, on to one or other of the boards. I say one or other of the boards because in one or two of these cases there are two boards.
Whether we look at the comparison of a private company—unrepresented, even though there is a majority shareholding—or at British Aerospace or British Petroleum, as precedents in the public sector here, or whether we look to Europe, at airlines of comparable strength and importance to British Airways, the position remains the same. Where there is retained on behalf of the taxpayer a majority involvement in any one of these circumstances, then, through the responsible Minister, there is the appointment of at least one director.
I have suggested that these directors should be appointed purely on a non-executive basis because I repeat that that is the pattern in British Petroleum and in British Aerospace. It is the pattern to a large extent in the European airlines to which I have referred, and so, in my contention should it be the pattern in British Airways Limited.
I accept, as the right hon. Gentleman said, that British Airways are facing very considerable difficulties in the period that lies immediately ahead. They are faced with difficulties of rising oil prices and of fares which are under the microscope in the EEC and in other ways. They are faced with all the threats that whole or partial de-regulation may bring in its train. They must look across the Atlantic to the example of the United States airlines and see that they are in for very troubled times indeed in terms of continuing profitability.
There is an additional element in regard to British Airways—that they are about to become a mixed public-private corporation. Government policy will be extremely important for airlines in the immediately foreseeable future. In those circumstances, it would be impossible for British Airways Limited to ignore developments in Government policy. There is a very real need for my new clause not only in regard to the taxpayer but also in order to keep British Airways Limited advised of the changing thinking on aviation that will no doubt overtake the Department of Trade.
I hope that my hon. Friend the Under-Secretary of State, whatever else he may challenge, will not challenge the suggestion that there may be a change of policy, because some of us have observed from recent ministerial pronouncements concerning aviation that a change of policy may very well take place under the present Government.

Mr. Barry Sheerman: Many of us on the Labour Benches found the arguments advanced cogently by the hon. Member for Brentwood and Ongar (Mr. McCrindle) very convincing on this aspect of the Bill, at least in Committee, and I am only sad that more Conservative Members are not present to hear their colleague's condemnation of the absence of any Government-appointed directors on the proposed new board of British Airways.
Sitting on the Opposition Benches, it is interesting to note that during the hon. Member's speech certain Conservative Members were leaving the Chamber in order to get the annual report of British Airways. It is a pity that some of them did not read it some time before we started on the long hours of debate in Standing Committee.
I shall not speak for long on the new clause because the arguments have already been very well rehearsed in Committee, but I should like to make a very important point that is essential to the whole debate on directorships. It seems to many Opposition Members that the root of the problem is the fact that the Government have an inability to understand that there is a sophisticated and important relationship between Government and autonomous and quasi-autonomous bodies.
The history of the 13 months of the present Government has shown us that the Government look in very black-and-white terms at the relationship between Government and other bodies in which they have an interest or might have an interest. Their whole attitude towards quangos has led us to a ridiculous position in which many bodies doing a great deal of good work have been undermined and some have been abolished, and a great deal of good will in the community has been lost because of this blanket black-and-white attitude—that anything that is a quango, a quasi-autonomous non-governmental body, is necessarily bad.
That is a parallel to the Government's attitude towards the nationalised industries. That seems to be that there must be nationalised industries or there must be private industry, and never the twain shall meet. I am one of those Opposition Members who believe that the future of British industry and of British civil aviation is bound up with a complex relationship between Government and private industry. It necessarily must be, in terms of civil aviation, because of the complex and international nature of civil aviation, and the relationship between Government and civil aviation in Britain must be one of sensitivity, flexibility and change.
This Bill is the wrong kind of Bill to introduce, because I believe, as do many Opposition Members, that it is a short step from this Bill to the complete selling off of the public interest in civil aviation and the national flag carrier of British Airways. Many of us believe that the reason why the proposal to have two Government appointed non-executive directors has been so fiercely resisted by the Government, and the reason why the Under-Secretary is so unforthcoming about whether this is the policy for all time, is that when most Ministers stand at the Dispatch Box, they say "This is Government policy, and we have had done with it." They do not have to fill in any qualifications, any hesitancy, any building-in of escape clauses. It is either Government policy or it is not Government policy.
We have today had rehearsed what we heard time and again in Committee: that it is the Government's policy as of this moment; it is Government policy today. It might not be Government policy tomorrow, next week or next year. So


there is a hesitancy about all the pronouncements regarding the Bill. The Bill is full of question marks, and/or "maybes" and "ifs". When will the Bill be implemented? When will the shares in British Airways be sold off? At what juncture, when and in what way, and how many? What will be the precise relationship between the Government and the new board? We are not altogether sure about that.
When we reach part II, the House will see that my qualifications about the difficulty of the Government's relationship with other bodies outside is highlighted by the strange relationship envisaged between the Government and the CAA, a relationship which, in Committee, we thought had been spelt out relatively clearly. However, two weeks ago we had the announcement about the decision of the Secretary of State for Trade on granting licences for routes to Hong Kong. Many Opposition Members were amazed then because all the arguments that were heard in Committee were turned on their head. Unfortunately, the Under-Secretary was not in the Chamber then. I think I am right in saying that. It was probably a very good thing to spare his blushes in relation to what he said in the hours and weeks that we spent in Standing Committee, because at that juncture everything that he had said was reversed.

Mr. Tebbitt: I would not want to trap the hon. Gentleman into discussing matters which will no doubt be discussed on a more appropriate part of the Bill. However, I should remind him that the anxiety which he and his colleagues expressed in Committee was that the CAA would make bad decisions and would not be overruled by the Secretary of State.

Mr. Sheerman: I certainly agree that we were making a rather different case from that of the Under-Secretary. However, on Report we expect Governments to make the same arguments as were made in Standing Committee and to adhere to them and to maintain the kind of relationship which they envisaged a few weeks ago—although at the same time they make an announcement on route licensing which seems to stand everything that the Government said in Committee on its head.
I return to the main thrust of my remarks. The central ambivalence about external bodies will be highlighted during this Report stage. The relationship between British Airways and the present Government is an uneasy one, as is the relationship between the Government and the CAA. It is about time that we discussed a proper and efficient relationship between the Government and autonomous and quasi-autonomous bodies. From my limited experience, it seems to me that one of the clear things at which we should aim is a proper relationship between the Government and the boards of nationalised corporations. I include those organisations not totally owned by the Government—the British Petroleum-style organisations.
The Minister has very often denied that there was a comparison with BP, but when one looks at the literature that the Conservative Party has produced over the past few years one constantly sees references to the BP model. If they were honest, the Government would admit that it is a BP model in many respects that they found most beguiling when they were designing this new format for British Airways. The one great difference, as the hon. Member for Brentwood and Ongar pointed out, is that the relationship is different in comparison with BP, in that there will be no representation from the Government on the board of British Airways. We find this rather strange.
It is to repeat the arguments to say that I believe that my constituents who are perhaps involved in their leisure time in organising the management and running of things such as working men's clubs would be horrified about the principle that an organisation has 51 per cent. of its shares—perhaps more than 51 per cent.—owned by someone outside who is not represented on the management committee. That does not make sense to ordinary people outside. From what I can judge from response on the Conservative Back Benches from Members who did not serve on the Standing Committee, it does not make sense to them either. If there were more Conservative Members on the Back Benches at present, I think that they would be persuaded by the case which we are making on these two clauses.
It does not make sense to have no Government representations on the BA board. I am sure that, as the people


realise that their national airline is being taken away from them by a group of people who are purchasing only a a minority of the shares, that old fashioned statement will percolate through—"We wuz robbed."

Mr. Onslow: Before I turn to the content of the new clauses, I want to say something about the speech of the right hon. Member for Lanarkshire, North (Mr. Smith). One could tell from his speech that he is a lawyer. It was clearly a compôte of all the arguments which had occurred to him, whether mutually consistent or not, inflated into objects which he hoped would frighten, and therefore convince, his audience. These are the typical scaremongering tactics that we became familiar with in Committee from the right hon. Gentleman. He did not say much that he had not already said in Committee. He did not convince the Committee, even though he was then arguing a different proposition. In Committee he argued that a majority on the board of the new company should be Government directors, which is not what he is arguing today.

Mr. John Smith: The hon. Gentleman will remember that we put a number of propositions in Committee and that the one that the House is now considering was not defeated. There was a draw.

Mr. Onslow: If the right hon. Gentleman had been listening he would know that I did not say that it was defeated; I said that he argued chiefly a different proposition in Committee—that a majority of the board should be Government appointments. The right hon. Gentleman's scaremongering tactics included an attempt to suggest that the board's intention on attaining its independence—that is, in effect, what we are hoping to achieve—is instantly to set about selling off the most prosperous parts of its operations. I must declare an interest as a consultant to Bristow Helicopters Ltd, a company which did much more of the pioneering on the North Sea than British Airways did. It would never occur to me to tell Bristow's that it had a chance of acquiring British Airways helicopters. The Monopolies and Mergers Commission would stop it. That is not a sensible proposition.
The right hon. Gentleman knows that what he has said is nonsense, but he trotted it out as a ritual bone to throw to the hon. Member for Feltham and Heston (Mr. Kerr), who needs something to gnaw on from time to time. I am sure that it has served a useful purpose in that context.

Mr. Russell Kerr: I do not need the publicity.

Mr. Onslow: I am sure that, if the hon. Member did, he would astonish us all by making a speech. If he says that he does not want publicity, I take his word for it.
The right hon. Member, for Lanarkshire, North seems to have a curious fixation about the forward investment programme of British Airways and the inevitability, as he sees it, that it will be carried through exactly as it was originally conceived, whether circumstances have changed or not. The right hon. Gentleman reminded us that the airline market has changed a great deal. He knows that the re-equipment plan was formulated in market conditions very different from those of today. If he believes that the board of the new company should be slavishly bound to follow every decision made two, three or four years ago—about the acquisition of 747s or whatever—without using its own intelligence and knowledge of market changes to review those decisions, his business experience must be very small.
If the right hon. Gentleman supposes that that is the function of the new board—simply to implement all the decisions taken in the days of nationalisation—he cannot be directing his mind to the functions of the new board. Those functions will be to run the company in the "best interests" of the shareholders. I take those words from the several excellent speeches by my hon. Friend the Under-Secretary in Committee.
The House will find my hon. Friend's remarks best summed up in column 189 onwards of the Committee Hansard. It may be a little misled by the fact that these sensible arguments are attributed to the hon. Member for Huddersfield, East (Mr. Sheerman), in which case I imagine that hon. Members might have skipped them. Even the hon. Member for


Huddersfield, East must have skipped them.
I remind the House particularly of what the Minister said:
There will be no Government directors as such. Like any other shareholder, the Government would be able to use their vote in respect of resolutions proposed by the board relating to membership of the board.
I do not readily foresee circumstances in which the Government would use their majority to veto the proposals of the board in this respect."—[Official Report. Standing Committee B, 24 January 1980; c. 190.]
I believe that that means that the Government would expect the resolutions put to the board to be broadly consistent with their own preferences—in other words, that the people who were to be nominated for membership would have had their names canvassed to the Government, that the Government would have said "Yes, we think that these are the people who can run the business in the best interests of the taxpayers and the shareholders. We see no reason to vote against them".

Mr. John Smith: Political vetting.

Mr. Onslow: "Political vetting", says the right hon. Gentleman—

Mr. McCrindle: My hon. Friend intervened earlier to suggest that what he thought I was proposing was that there should be puppet directors on the board. If all this canvassing has gone on beforehand, what is the fundamental difference in his proposition?

Mr. Onslow: I am very sorry, but I shall turn to my hon. Friend in a moment, so that he can turn his attention to me. I want to deal with the right hon. Gentleman while I am on this point and to ask him who on the list of non-executive members of the present BA board he expects would not reappear because they had been politically vetted? I remind the right hon. Gentleman who they are, in case he does not have the latest BA report and accounts by him—

Mr. Clinton Davis: Why?

Mr. Onslow: Because I want to be sure that I have the facts at my fingertips. I know that the hon. Member for Hackney, Central (Mr. Davis) is careless in his research, but I like to give the House the best information I can.
I remind the right hon. Gentleman that Dorothy Barrett, Alan Fisher, Albert E. Frost, Sir Henry Marking, Sir Peter Parker and Jeffrey Maurice Sterling are the non-executive directors listed in the latest available BA report and accounts. I do not detect that they are all of one political persuasion.

Mr. John Smith: That is not all of them.

Mr. Onslow: I am sorry.

Mr. Smith: I think that the hon. Gentleman is not accurate. I think that there is another director who is not named.

Mr. Tebbit: Yes, since that report was published.

Mr. Onslow: Yes, but I am sure that he would not claim to have been appointed because his political persuasion was the first recommendation that he had. Therefore, the point about political vetting is a very silly one, even for the right hon. Gentleman to make.

Mr. John Smith: The thought occurred to me, in an interrogative fashion, only because the hon. Gentleman was contemplating thorough canvassing of people who would be put on the board—canvassing presumably done by the Government. The point of canvassing people is no doubt to find out their views. If the hon. Gentleman would be happy to see independent-minded people on the board, what is the point of all this canvassing that he envisages?

Mr. Onslow: I am sorry, but the right hon. Gentleman has a genius for getting hold of the wrong end of the stick. What I meant and what I said was that the Government, as the majority shareholder, would be likely to be asked, before names were put forward to the AGM, whether they were suitable. It is not the Government who will do the canvassing but the board of the company, which presumably would consult its shareholders before making important decisions.
The right hon. Gentleman does not know boards which do these things—that is his loss—but I think that he would, from his former responsibility for company affairs, endorse the view that a board of directors should keep in touch with its shareholders as best it can about such important matters as board appointments.

Mr. John Smith: rose—

Mr. Onslow: No, I will not give way, or we shall be up and down all the time.
I now turn to the point that I put to my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle). What sort of people would he see sitting at the board table with the Government's dog collar around their necks and what does he think they would particularly do? Would they be different from the present non-executive directors? Has my hon. Friend some different qualifications in mind? Does he suppose that in one year or two years the board of British Airways non-executive directors will be different from those who are at present non-executive directors? If so, why does he feel that?
Thirdly, my hon. Friend told us that these non-executive directors in the Government dog collar would change their advice to the board as Government policy changed. That was what led me to say that they were puppets—although ventriloquists' dummies might have been a more accurate description. I cannot see that they can be said to have a will of their own if that is what he envisages their function as being.

Mr. McCrindle: In order to save a long intervention, the summary reply to my hon. Friend is that I foresee non-executive directors appointed by the Government to the board of British Airways as being similar to the non-executive directors appointed by two other Secretaries of State to other similar boards. The question to which my hon. Friend must address his attention is: where is the fundamental difference between the type of company to which I have referred and the proposed British Airways Limited?

Mr. Onslow: It is not that at all. The fundamental question is why should the people whom my hon. Friend wishes to see sitting there—simply because the Government have sent them there as dummies—be there at all? My hon. Friend has not told us this. He has not told us why he thinks that the overall composition of the board will differ so widely from the people who have run British Airways in the past with considerable experience, success, great public responsibility and an awareness of their

duty to the taxpayer as the provider of the funds. Does he think that they will all be swept aside? Who will replace them? What fundamental change does he think will come over the board because of this measure? My hon. Friend has not suggested any reason why this might happen. He has just said that it would be a good idea to have two members of the great and good sitting there in case something goes wrong.

Mr. John Smith: Did the hon. Member for Woking (Mr. Onslow) dissent from the proposition put forward by the Secretary of State for Industry on Second Reading of the British Aerospace Bill when he made two points—first, that there was increasing agreement among commentators that company affairs would be strengthened by external directors; and second, that the Government would ensure that the board of British Aerospace Limited would have the benefit of two external directors?

Mr. Onslow: That has nothing to do with it. We are discussing a different company which intends to do something different. I do not dissent from the point about external directors. I am all in favour of the right hon. Gentleman being educated as widely as possible by being put on some boards so that he can get it into his head how a company works.

Mr. Tebbit: My hon. Friend the Member for Woking (Mr. Onslow) has obviously grasped the point that seems to have eluded a number of hon. Members—that the Government have made it perfectly plain that there will be non-executive directors on the board of the company. I do not really understand the need for the argument about the role of the non-executive director. That argument is finished, over and done with. We have agreed with it. It is another one of the nightmares of the right hon. Member for Lanarkshire, North (Mr. Smith), which he keeps dragging up to no effect?

Mr. Onslow: I entirely agree with my hon. Friend. It is a sterile debate into which we have been led by the repetition of the amendments.
Finally, my hon. Friend the Member for Brentwood and Ongar has not given us a reason why there should be two non-executive directors with this qualification only—that the Government have put them


there. Why should the Government do this? Is it so that they can be constantly aware of the changes and shifts in Government policy, or so that other members of the board may be constantly reminded that, if they make decisions which do not conform with Government policy, they might find themselves voted out at the next annual general meeting? My hon. Friend has not said anything about the important point, and the Opposition have not begun to turn their attention to it—the contribution that the appointees in the Government dog collar make to the general efficient management of the company which must be the overall objective and which leads to its taking sensible investment decisions and running the company with the best interests of the country at heart. There is no reason why such people should be on the board and I believe that the amendment should be withdrawn.

4.45 p.m.

Mr. Clive Soley: I do not wish to take up too much time, as we have been over this argument many times before in Committee. Clearly the Government will oppose the argument and clearly they will use their majority to reject both new clauses. But we can say with some certainty—whether we take the view of the hon. Member for Brentwood and Ongar (Mr. McCrindle) that it is an injection of private capital, or whether we take the view that it is a move towards denationalisation—that it is abundantly clear that this is a total abdication by the Government of any responsibility to the taxpayer. That is what this is all about.
There is a terrible lack of understanding, particularly on the part of the hon. Member for Woking (Mr. Onslow), about the interests of shareholders, as opposed to the interests of the taxpayers generally, which may or may not be the same thing. That point is not always grasped, and it is that point to which the Government seldom respond in a debate of this kind.
This debate is about accountability. If one has two Government directors—whether they are in a dog collar or not—they are answerable to a Minister who is answerable to the House. Given that the people of this country have an interest in a successful national airline, be it

nationalised or otherwise, it is right that they should have a voice in the House. Politicians are here to represent the British people and a failure to deliver the goods in an effective interest such as this is a failure of accountability. That is what the hon. Member for Woking fails to understand in his worship of shareholders' rights over and above those of the British public generally.
I am worried about the whole concept of selling in this Bill. The hon. Member for Brentwood and Ongar made the point that timing was crucial. But when will the timing be right? I find it difficult to think of a time in the next 18 months when it will be right. British Airways are facing major problems, given the general state of the financial market, the changes in the airline business and the apparent determination of the Secretary of State to stir up a price war. Already in the newspapers we see advertisements by British Airways for cheap flights to Hong Kong to try to compete with Cathay Pacific and British Caledonian. The problem is that there is a limited number of airlines that will be able to survive this kind of competition in the coming financial climate. That is the problem. When will we sell the shares, at what price, and to whom? If they are sold in the reasonably near future, I suspect that they will have to be sold at a pretty low price to bring off the sale.
I am not an expert on finance and I do not claim to be, but this does not look to most people like a particularly attractive investment in the immediate future. If that is so, who will buy and why? There is potential here for asset-stripping and unless there is some import by the Government to represent the British taxpayer on the board a situation will arise in which the shareholders' interests will clash with the interests of the public. In that case the British taxpayer will lose out. The Minister will be responsible for that, not the shareholders. The Minister consistently ducked this question in Committee.
It is not responsible government to say simply that they have decided to sell off this national asset because they want to sell State organisations, and then say that they will forget the public interest. I understand the Government's philosophy—although I do not agree with it—in wanting to sell State-owned organisations in


order to get more money back from the public sector. That aim has been stated again over the weekend. That philosophy cannot be in the long-term interests of the country unless the sale is right and unless there is some Government representation to respond to the public interest.
In Committee I raised the problem of foreign airlines buying into British Airways. Hon. Members seem to forget—and the Minister did not respond to this in Committee—that in the EEC it is within the law of the Treaty of Rome for one airline to buy in. One reason why other European Governments have a significant holding in their airlines is to prevent that from happening and to represent the public. If there is a desire to see the British national airline decline and others take its place, it should be clearly stated, and there should not be the pretence that it is in the interests of the shareholders and the public not to have Government directors on the board. The only way to protect the interests of the British people is to have Government directors on the board. There is no alternative.

Mr. Michael Neubert: As on Second Reading, I declare an interest as a travel consultant. I do not have to convince the House of my enthusiasm for competition. Like the Minister, I served on the Competition Bill Committee, which I suspect saved me from serving on the Committee on this Bill.
My enthusiasm is for fair competition. The Bill would create a novel company. How commercial will the new company be if public directors are not appointed to the board? Up to 51 per cent. of the shareholding not being represented on the board is not typical. British Airways is a public sector monopoly, certainly in its domestic operation and some of its subsidiary activities in this country if not internationally. There is more doubt about what kind of creature the new company will be. A public sector company is objectionable enough. However, if there was private participation and potential profit in a public sector monopoly, it would be thoroughly objectionable and unfair competition by any standards. Government directors could exercise their judgment in the public interest.
On 17 March, three days before the conclusion of the Committee stage, my hon. Friend the Under-Secretary of State told me in a letter:

As regards the application of monopolies and mergers legislation, the full rigours of the Fair Trading Act and the Competition Bill when it is passed will apply to British Airways when shares are sold just as they apply in the case of any private sector company.
In regard to that legislation, my hon. Friend puts the new company on all fours with other private sector companies. Can he give us chapter and verse for that? If my hon. Friend can take time to give me a seminar on the matter, I shall be delighted.
Under the Fair Trading Act 1973 British Airways is excluded from the normal rigours of monopolies legislation. Schedule 7, part I, item 7, wholly excludes the carriage of passengers or goods by air. Will the Bill change that? Will the directors have to take account of that in their activities? I can think of no private sector company with half its shareholding held by a certain shareholder that would not have that holding represented on the board.
The proposed make-up of the board suggests full-blooded commercialism, with financial support but not direction from the public purse. The company would therefore appear to retain at least one characteristic feature of a monopoly. That kind of monopoly is demonstrated by British Airways' present activities—a use of overweening strength and size to dominate the market. As an illustration, I quote from "British Airways News" of 29 February. In describing British Airways' activities in the holiday market, it says:
the airline has a range of holiday products marketed under brand names such as Sovereign, Enterprise, Speedbird, Flair and Martin Rooks. Together they make the airline the second largest tour operator in Britain.
The next sentence is significant:
To have even more control on the development of the market British Airways has moved into hotels worldwide to boost its tour activities.
With the benefit of public money and prestige, British Airways can act to control the market in which it is operating in competition with private enterprise. That is my concern. How will the Bill change that?
The Minister's views about the role of the directors have been quoted. It is to run the company in the best interests of the shareholders. That does not surprise me. To what extent will the constitution


of the board and the new legislation temper its necessary and existing disposition to exploit a monopoly share of the market?
On Second Reading the Secretary of State said that there was no intention to divest British Airways of such activities as hotel keeping, running retail travel agencies and tour operating. We have seen examples of the considerable strength that British Airways brings to these activities that are otherwise the province of private enterprise. British Airways has opened a shop in Oxford Street, the most expensive location in the land, with 45 staff and multiple new devices. We are told that British Airways is to be a private sector company like any other. Could any other private sector company afford to do that?
Can my hon. Friend quote evidence in that regard from the United States, which seems to be a pacemaker in aviation policy with regard to deregulation, among other things? Can be confirm that United States' law precludes airlines from engaging in such subsidiary activities? Public sector directors would at least safeguard the industry against such monopolistic practices. One danger is cross-subsidisation. On 22 March British Airways took a double page in The Daily Telegraph to advertise its total range of services, including inclusive holidays. British Airways now announces that it wishes to be known only as "British", which will make it easier for its multifarious activities to come under one heading. It will be even easier for the disposition of funds for one activity rather than another to be made out of sight of the studious public.
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Even if my hon. Friend the Under-Secretary were able to assure me that under the Bill the new company will be exposed to the full rigours of monopolies and mergers legislation, the company will take a short cut to its new status. It will not have had to go through the hoop of the 25 or 30 per cent. qualification for a monopoly reference. That will confer an unfair advantage on the company even if, from then on, it is liable to the full rigours of monopolies legislation. To make it clearer, who can imagine that if both BEA and BOAC had been private sector companies at the time of their merger there would not have been a reference to

consider the monopoly aspects of the merger?
British Airways has the largest network of routes of any airline in the world. It is a considerable monopoly. It is subject to intense competition on international routes, but that does not apply to its domestic operations or to its spin-off subsidiary activities in this country, which cause me so much concern.
I hope that my hon. Friend the Under-Secretary will expand a little more than he has been able to do in correspondence with me or on previous occasions when I have raised the matter in the House on how he thinks the new company will compete fairly with existing private enterprise operators.

Mr. K. J. Woolmer: Rather than going over the grounds for opposing the whole Bill I should like to concentrate on the new clause. We are discussing the Bill, which provides for the effective denationalisation of British Airways, because of the worst combination of ideology on the part of the Government and financial expediency in their aspiration to raise cash by selling shares in what they hope will be a profitable enterprise.
The new clause is concerned with the appointment of two non-executive directors to the board of the new company. The public want to know why the Government think it right that, while retaining a majority shareholding in the company, they should not appoint any directors, executive or non-executive. Instead of my hon. Friends and some Conservative Members explaining why there should be two non-executive directors to represent the public interest, when the public own 51 per cent. of the shares, the Secretary of State should be explaining why the public's 51 per cent. shareholding is to be accompanied by not one Government appointed director. That is the pertinent matter.
The new company will not be just another private, Companies Act company. It will be at least 51 per cent. owned by the taxpayer and, as the Under-Secretary frequently pointed out in Committee, it will still be our flag, national airline. Yet the Government have said clearly that they do not intend to mobilise the right to appoint directors. We could get into the odd position of the substantial part of the minority shareholding being


purchased by institutions that wished to remain at arm's length from the management and the board of the business. It would be ludicrous if virtually all the main shareholders in our national airline had no wish to have any influence on how the company was run or who appointed the directors.
The Wilson committee report pointed out recently the need for financial institutions—pension funds and insurance companies—to take a much closer interest in the running of companies in which they have a significant shareholding. The tradition of financial institutions with a major shareholding in companies keeping at arm's length from the running of the companies, their prospects, investment programmes and role in the economy, is increasingly questioned. However, the Government are endorsing a policy of a major shareholding having no representation on the board.
The matter goes beyond British Airways alone. It is a pity that the question of Government-appointed directors on the board should become a matter of political ideology and disagreement. It is a pity that we cannot discuss the relationship between the public and private sectors, even to the extent of considering the appointment of one or two non-executive directors by the Government, without the matter becoming a doctrinal or ideological issue. That is at odds with the needs of our economy and with the need for the public and private sectors to find better ways of working together and reconciling the public and private interests.
That may mean an interchange of boards with a mutual understanding of the need for commercial objectives in publicly-owned bodies and the need to take account of the public interest. If it requires an interaction between Government-appointed directors and a largely non-Government appointed board, surely that is the sensible way to proceed.
It is a matter of regret that the Opposition have had to table the new clause to try to get two non-executive directors appointed to the new board. That should be common ground between the two sides of the House, even though we may differ about how the Government should exercise their influence and with what purpose and how to balance the investment requirements, the market objectives and the public and private interests. Foreigners

will regard it as another example of the British sickness that we should disagree over a situation in which the State has more than half the ownership of a public asset and yet, for doctrinal reasons, we cannot reach a political consensus on the need for even a modest representation on the board.
The hon. Member for Woking (Mr. Onslow) came close to saying that the Government would overcome any difficulties by backdoor winks and nudges. That would be the worst of all worlds. We should be going back to the worst sort of relationship between the Government and boards of directors.
Either we have an understanding of the relationship between the Government and mixed companies in our economy or we do not. This seemed to me to be an opportunity to mark out a way that would be workable under different political parties. As sure as we are here today, an incoming Labour Government will alter this arrangement. It is a tragedy that the differences are so wide that we cannot even agree on somewhere between no Government appointees and all Government appointees.
The parties should consider between them how best to work out arrangements between the Government and the nationalised or semi-nationalised industries. I hope that the Minister will not respond simply on the issue of two non-executive directors or on nit-picking issues, but will say why he thinks that there should be no representation of the public interest.
I believe that the new clause should be added to the Bill not only because of its significance for British Airways but as a demonstration of the attempt by the House to find a way to ensure that the public interest is not cast aside, and to show that we reconcile the commercial objectives of publicly owned bodies with the wider interests of the taxpayer.

Mr. Tristan Garel-Jones: I had not intended to take part in the debate. I was not a member of the Standing Committee, so I shall be brief. I intervene because as the debate developed I was struck by the staggering obtuseness of the remarks from the Opposition Benches.
What the Government propose is fairly simple. We have a company of which on formation every director will have been


Government-appointed The Government are saying that thereafter normal company procedures will operate.
The hon. Member for Hammersmith, North (Mr. Soley) spoke about the House having a duty to represent the taxpayer, who, after all, will be the main shareholder. Amen to that. But I suggest that, if asked, the taxpayer would feel much happier about normal commercial practices, rather than constant Government intervention, prevailing in a company.
The Government's commitment with regard to mobilising their own shareholding is absolutely clear. I quote from what my hon. Friend the Under-Secretary of State told the Committee:
The board will…be free to plan and execute its programme of capital and other investments and generally to run the airline on the most successful and profitable basis that can be achieved.
The only means of influence available to the Government will be by using the voices which attach to their shareholding…
In the normal course of events, such resolutions cover the usual business transactions at annual general meetings of the company—the appointment of directors—
very important—
the adoption of accounts, the declaration of dividends, and so on.
An unbiased reading of my hon. Friend's statement—perhaps he will confirm this when he winds up—is that if Opposition hon. Members in the distant future have any responsibilities for these matters there is nothing to prevent them from using their shareholding to nominate such Government nominees as they choose. So there is nothing obstructive or dogmatic about the Government's proposal.
I very much welcomed the reasonable tone of the hon. Member for Batley and Morley (Mr. Woolmer), who spoke about the need not to be doctrinal and to seek better ways of managing great State enterprises. I agree with all of that, but if we have had any dogmatic, doctrinal approach it has come from the Labour Party. With that party's constantly shifting policies, one is not aware where it stands at present, but I understand that at some point a commitment was given at the party conference to confiscate any shareholding that went into private hands. That is not a very satisfactory and non-doctrinal approach to

seeking the sort of arrangement to which the hon. Gentleman referred and which I would support.
I hinge my support of the Government's case on the fact that the appointment of directors is an option that is always available to the Government and to the taxpayer as a majority shareholder.

Mr. Woolmer: If the hon. Gentleman is willing to support the Government in rejecting the clause on those grounds, is it equally his understanding that the Secretary of State has said positively that although the Government have the right to nominate shareholders they do not intend to do so? If the hon. Gentleman agrees with that, why does he think it right for the Government to declare, as the Secretary of State did in the House on 19 November, that the Government do not intend to use that right?

Mr. Carel-Jones: The Government say "except in exceptional circumstances". The option remains open. That is why I think that the Opposition are being obtuse.
What I believe the Government are saying, and what I believe the taxpayer will welcome, is that they will not be breathing down the necks of the management of British Airways every five minutes. Of course, they sensibly reserve the right, which would naturally accrue to any other party that ever had responsibility for these matters, to use their shareholding in the shareholders' interests, if the need should arise. It is wrong for the hon. Gentleman to suggest that the Government are in any way closing the door. They are not.

Mr. Woolmer: I was simply quoting from what the Secretary of State said in the House on 19 November. It is in the Official Report in black and white in column 42 that the Government do not intend to use that right.

Mr. Garel-Jones: I should like to quote from what my hon. Friend the Under-Secretary said in the Standing Committee, of which the hon. Gentleman was a member:
I do not readily foresee circumstances in which the Government would use their majority to veto the proposals of the board in this respect. However, should this occur,


the Government's prime consideration in exercising their rights would be what is in the best interests of the company."—[Official Report, Standing Committee B, 24 January 1980; c. 189–90.]
That seems to me to be a reasonable statement. Unless it is a matter of parliamentary tactics that escapes me, I do not understand why the Opposition are making such great play of the matter.

Mr. Tebbit: From my experience in the Committee, I concluded that the problem for the Opposition was this; they do not understand how these matters are arranged in companies. Therefore, they are unaware that it is the normal practice for a board of directors to submit to the annual general meeting nominations of directors to the board. What my right hon. Friend the Secretary of State has said is that he will not expect himself to nominate directors. But he and I have made it plain that we have the power, and if necessary would be willing to use it, to veto undesirable directors if they should be nominated.

Mr. Garel-Jones: I am grateful to my hon. Friend for that intervention. We might make an exception in the case of the right hon. Member for Lanarkshire, (Mr. Smith) and nominate him to the board, so that in the long time that awaits him in opposition he might gain some experience in these matters.

Mr. Bill Walker: I was a member of the Standing Committee, where I listened at great length to the points that were made, just as I am listening today.
The Government are to be congratulated on grasping the nettle. It is business nonsense to have someone nominated to any company wearing a Government-sponsored label and then to pretend that he somehow acts as the public's conscience. Whatever happens in a company or a board of directors, the primary concern is, and should be, profitability and continued profitable operation to continue the employment prospects of all who work in it. That is much more important than playing politics. Non-executive directors should be appointed to make meaningful contributions to the efficient and profitable direction of the company.
I welcome the proposal that there will be no Government directors as such.

Many people share my view. I am against jobs for the boys, wherever the boys come from. I am not worried which old school they attended or which trade union they were members of.

Mr. Sheerman: How can the hon. Gentleman be consistent in the point that he makes while supporting his Government on British Aerospace and supporting them on this Bill where the practice is totally different? It seems that the hon. Gentleman does not understand the purpose of non-executive directors.

Mr. Walker: I have served as a non-executive director and also as an executive director. I can assure the hon. Gentleman that not once in my career have there been complaints that I did not understand what I was doing or that I was not doing it effectively. Those who think that two companies operating in different markets are alike show that they are completely ignorant of business activity and operations. The more interjections we have of the kind made by the hon. Gentleman, the more Opposition Members will show how little they know about making profits and keeping people in jobs.
The discipline upon board members should be the result achieved by the new company in the market place. That should be the discipline on the directors, so that when they appear at the annual general meeting they are made accountable. I welcome the comments made by my hon. Friend the Under-Secretary of State in Standing Committee when he said:
I do not readily foresee circumstances in which the Government would use their majority to veto the proposals of the board in this respect. However, should this occur, the Government's prime consideration in exercising their rights would be what is in the best interests of the company".—[Official Report, Standing Committee B; 24 January 1980; c. 190.]
The best interests of the company are what matter. The company will be run by directors in whom the shareholders have confidence. That sums up the situation. The directors will be there because the shareholders have confidence in them and the shareholders will only give that confidence at the annual general meeting based on the results achieved by the new company.

Mr. John G. Blackburn: I am saddened by the tenor of the debate. As a member of the Standing Committee, I found it a hard-working, constructive and happy Committee. I can appreciate the points made by the hon. Member for Batley and Morley (Mr. Woolmer) about the sadness of the division that exists over the new clause relating to non-executive directors. The hon. Gentleman is, in many respects, justified in informing hon. Members of his misgivings that there should be this impasse at the beginning of the Bill's Report stage.
I would respectfully direct the hon. Gentleman's attention to another sadness. I find it a sadness that we are holding a funeral and an inquest on a company that has not yet been born. I should like to outline some of the positive and constructive things brought about in Committee and now on the Floor of the House regarding the management, at director level, of this company. It has been suggested that this is, or should be, a BP model. I should like to consider the role of BP in that connection. I direct the attention of the House to remarks in Standing Committee.
The fact that British Petroleum had a Government director was a significant feature in the relationship although it did not stop it going straight to the Government."—[Official Report, Standing Committee B; 24 January 1980; c. 193.]
That is extremely important. Those were the comments of the right hon. Member for Lanarkshire, North (Mr. Smith). I know him to be an honourable and truthful man. I believe that this was his experience. Although there was no director, it was still possible for the company to approach the Government.
Reading on, I find an interesting comment by the Under-Secretary of State which, I think, could be described as the voice of prophecy. The voice of prophecy has become the voice of reality. My hon. Friend said:
They are areas in which, clearly, Her Majesty's Government have a policy towards other countries and clearly, an airline, whether it is British Airways Ltd., British Caledonian Ltd. or Laker Airways Ltd., will represent to the Government its views about such matters."—[Official Report, Standing Committee B, 24 January 1980; c. 193.]
I believe that the board of British Airways has a solemn responsibility, as a board of directors, to plan the execution of its capital and its investment pro-

gramme and to bring it to profitability and to continue in that vein. The interesting remarks of the hon. Member for Hammersmith, North (Mr. Soley) were a prominent feature in Committee. When will the shares arrive on the market? What will be the timing? What will be their price? It was stated that care would be needed, for the sake of the future investment programme of British Airways, in ensuring that these matters were handled, correctly.
I believe that in business life, in political life, and in the House today, we are being called upon to exercise the gift of faith. The shares must be issued at the right time, at the right price and at a time when the market can respond, when capital will be forthcoming for the future and continued success of British Airways Ltd. whether or not it contains non-executive directors. It would be hypocritical for me to say, on a matter of policy, that it was about time the Government got off the backs of industry. I believe that the Government have no right to run industry. This is not the role of Government. I do not believe that there are people qualified, in Governments of any persuasion, to run an industry such as British Airways. Equally, it is a solemn responsibility of any Government to create an environment in which that industry can prosper. I believe that it will prosper without executive directors. What British Airways want now from this House is a vote of confidence and assurance for their future.

Mr. Tebbit: I must apologise to the House in advance if I find little new to say on this matter. We discussed it at great length in Committee. I do not feel too bad about saying that. With the greatest respect, I feel that the right hon. Member for Lanarkshire, North (Mr. Smith) would be the first to admit that he was not able to find anything terribly new to say today. He spoke, as always, with the same charm and general reasonableness with which he puts forward his arguments. There were, nevertheless, no new arguments advanced.
My hon. Friend the Member for Woking (Mr. Onslow), as usual, demonstrated a robust understanding of the commercial facts of life. It was a pleasure to hear my hon. Friend shoot down so crisply the spectre which had been raised by the right hon. Member for Lanarkshire,


North that British Airways Helicopters might be sold off to Bristow's of all people. He did it with a single sentence reminding the right hon. Gentleman that the powers of the Monopolies and Mergers Commission still existed. It would not be for me to prejudge such a matter, but I think that most of us will see that that was likely to be represented to the Government as creating an undesirable monopoly.
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I worry sometimes about the hon. Member for Hammersmith, North (Mr, Soley). He seems to find life so gloomy, dull and depressing. As I said in Committee, he enjoys nothing more than a touch of really good misery. He was full of dark hints about the Government directors who should be appointed, and he said that they should be answerable to the Minister—not to the shareholders. I have to ask him what I recollect asking him in Committee. On what issues and in what circumstances does he think it right that Government-appointed directors should act in the interests of the Government and against those of the company to which they are appointed as directors? Legally, the answer is "Never". If they act against the interests of the company, they are coming close to the edge of improper conduct.

Mr. Soley: It is very nice of the Minister to think of me as a gloomy person. I do not take that view. Let me put to him the example where the company sees it as advantageous to withdraw from certain routes or even to sell off a certain sector of its organisation to another airline. That might not be in the national interest.

Mr. Tebbit: I recollect now what the hon. Gentleman has in mind. He wants a private sector company to subsidise one of its activities out of the profits of another at the behest of the Government. He may have in mind what happened when the British Overseas Airways Corporation, under a Labour Government, decided to withdraw from the South American routes which have since been carried on by a private sector company, British Caledonian Airways Limited. He may have in mind the decision of British Airways to withdraw from some domestic routes which have since been carried on and are to be carried on in future by pri-

vate sector companies which feel that they can operate them profitably, whereas British Airways quite rightly—not because of inefficiency, but because they are a trunk and international carrier and not a local one—decided that it could not. Does the hon. Gentleman think that it is the business of the Government to decide which routes the company should operate? He has to understand that either the company operates commercially or it does not. He is saying that his view of the job of Government directors would be to see that it did not operate commercially.

Mr. Soley: I had in mind the running down of certain aspects of the company But let me stand the argument on its head. It is obvious that I shall not convince the Minister with my examples, but why is it that all other major airlines have this sort of Government participation or, if they do not—as is the case in the United States—there are clear regulations about buying in by other airlines?

Mr. Tebbit: The hon. Gentleman will be able to come to his argument about buying in by other airlines at a later stage. However, he says "other than the United States". He ignores about half the world's international air transport industry if he ignores the United States. If we are talking about air transport, we should start from the proposition that the greatest air transport Power in the world, the United States, may know something about how to arrange these matters. It is a private enterprise way. It is for the rest of the world to justify the means by which nationalised carriers in Europe, for example, ensure that the consumer pays about twice the fare per mile for a comparable journey than he would in the United States. Presumably that is the role in the mind of the hon. Member for Hammersmith, North of the Government director. It is to make sure that the consumer pays more than he need by forcing the airline into non-commercial practices.
The remarks of the hon. Member for Huddersfield, East (Mr. Sheerman) were very interesting. He seemed sure that Governments should always claim that their policies were immutable and unchanging. He thinks that I am a very odd sort of Minister to say that this is the Government's policy and that it will remain the Government's policy so far


ahead as we can see. But I do not guarantee that it will remain the Government's policy for all time, because circumstances may change and judgments may change. I do not guarantee that even this Administration will maintain a 51 per cent. holding for ever.
I should not have thought that that marked some political bias, arrogance or anything of that kind. It is a realistic attitude. If the Government are to have anything to do with commerce, above all they must shape their policies in accordance with the circumstances of the day, and those circumstances cannot be set out on a tablet of stone as though they were there for ever, in the way that the Labour Party set out its economic policies in the nineteenth century and has made no progress ever since. That is literally true. They were written in the nineteenth century, and they have not changed since because they are in the constitution of the Labour Party. Unhappily, the death of Mr. Gaitskell probably robbed the Labour Party of the chance to come into the twentieth century. It is still in the nineteenth century, and its economic policy is still written on the tablets of stone or on the original sheets of paper.

Mr. Sheerman: The Minister cannot get away with it by always grossly caricaturing the Opposition's arguments when we are trying to make a reasonably sophisticated point which I am sure he picked up in Committee. We were trying to make points from which he could learn something. My argument was that most Ministers said "This is our policy" without hedging it round with qualifications, as he did. It marks out that difference between the Minister and his Front Bench colleagues. I remind him also that the Labour Party was founded in this century. It is the Conservative Party whose economic doctrines today belong to the nineteenth century.

Mr. Tebbit: The hon. Gentleman may think that I am an unusual Minister. He is entitled to that opinion. However, the Government's policy is and, so far as I can see, will remain, to keep a 51 per cent. or greater holding for as long as it suits them. That policy is unchanging. How much suits us may change from day to day. The hon. Gentleman must take it in that sense.
I come to the speech of the hon. Member for Batley and Morley (Mr. Woolmer). The hon. Gentleman may not be aware that the boards of companies feel under an obligation to keep in touch with their major shareholders, even if the major shareholders do not nominate directors to their boards. Although much more obscure than the hon. Member for Hammersmith, North, the hon. Member for Batley and Morley was just as threatening about the role of Government directors in requiring the company to obey the Government and not commercial needs. I do not think that I need say any more to emphasise the dangers.
My hon. Friend the Member for Romford (Mr. Neubert), as always, made a case which was balanced, reasonable and sensible. He spoke about the extent of the application of competition policy to airlines. Schedule 7 to the Fair Trading Act 1973 sets out certain activities which are excluded from the scope of monopoly references under section 50 of that Act. My comments at column 527 of the Official Report of the Committee proceedings related to merger control under section 65(3), which is not restricted in the same way as section 50.
There are no plans to amend the reference in schedule 7 to the carriage of passengers or goods by air. That is not necessary, because the licensing functions of the Civil Aviation Authority and the presence of foreign operators on foreign routes ensure that there is adequate competition. It would, therefore, not be necessary to use the powers in that way. My point is that British Airways are excluded from complying with any part of competition law only to the same extent, and precisely to the same extent, as are British Caledonian, Laker and other airlines. So they are not in a privileged position in that sense.
There will be no special Government financing for British Airways so it would not be true that when the company is formed taxpayers' money will be used to subsidise some acitvities. The Government may subscribe for voting shares or what may in effect, become voting shares and we shall have further discussion on that precise definition later. The Government will not have any obligation or power to make or guarantee loans.
The company will be an independent company. If it wishes to have an office


in Oxford Street, Piccadilly Circus or anywhere else, it will have to decide that is in its commercial interests. That will be a matter for the directors acting purely in the commercial interests of their company.
There is no intention on my part to make British Airways divest itself of its hotels or other interests any more than I would wish to make British Caledonian divest itself of its hotels or travel interests. We must treat all companies alike. I am not an expert in United States law—nor indeed in British law, let us be honest about it—so I hesitate to say what the position is in the United States. I shall inquire and let my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) know. To my knowledge, both Pan American and TWA have interests in hotels. Clearly, therefore, that is possible under United States law. However, I think that it would be wrong of my hon. Friend to expect that Government directors on the board of British Airways would in any way act against the interests of the company.
My hon. Friend the Member for Watford (Mr. Garel-Jones) summed up the position neatly and clearly on most of the matters we have discussed. He put his finger on it without saying it in so many words. The trouble is that the Opposition think that a company meeting is something like the NEC of the Labour Party or the Labour Party conference. It does not run like that because, apart from anything else, everybody there has the same objective. It starts, therefore, on a different basis—that is, the profitability of the company.
My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) spoke lustily of the need for directors to pursue the commercial interests of the company. My hon. Friend the Member for Dudley, West (Mr. Blackburn) was right to emphasise that what we must do now is get British Airways launched as soon as possible and let it get on with its job. We had lengthy debates on that in Committee and my hon. Friend the Member for Brentwood and Ongar had something to say then. He has tabled new clause 14, which is for discussion this evening. Although I appreciate that it would operate only while the Secretary of State held more than 50 per cent. of the issued shares, I have to say to my hon. Friend

that neither his new clause nor that of the Opposition would be appropriate provisions in this private sector company in which the Government do not commit themselves for ever to retaining a majority of the shares.
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The provisions would be viewed by other investors as an unacceptable priviledge attaching to one particular shareholder, and because that shareholder is the Government it could give the impression that the successor company was a creature of Government little different from its predecessor, and that its activities might be, at any rate to some extent, influenced by the Government against the interests of the company in the way that the hon. Member for Hammersmith, North would like.

Mr. Sheerman: The Minister has still not explained the difference between this board and the board of British Aerospace. Why is there this simultaneous discrepancy between the two companies? If this were a Conservative Government 10 years ago, I could understand it. But this is a simultaneous piece of legislation.

Mr. Tebbit: I had hoped that I would not have to explain this again to the hon. Gentleman. I am, of course, willing to do so and the explanation may come anew to those who were not members of the Standing Committee. Let me put it this way.
British Airways Limited is not a monopoly, or near monopoly, in the sense that British Aerospace is in its sector. They operate in different areas. Those are two points to begin with. The third point, which is perhaps one of the most important, is that British Airways Limited, and British Airways at the moment, are not defence contractors to the British Government but British Areospace is. Therefore, the relationships between the British Airways—Corporation or Limited—and British Aerospace with the Government in future are different on at least three counts.
It is not surprising therefore, that we have come to different conclusions about the manner in which the boards would be set up. The only reason why the hon. Gentleman remarks upon it is that the conclusions have come about at the same time. If they had been separated, as he said, by 10 years he would not have been


surprised. But he is surprised that two Government Departments could look at the facts before them, come to a judgment on those facts, reach conclusions and find that those conclusions were different. They are different facts in different industries.
That may be a surprise to the hon. Gentleman. It is no surprise to me. I am not in the least perturbed about it, nor is my right hon. Friend the Secretary of State for Industry, so I make no apology for it. It is the appropriate way for us to conduct our affairs in relation to British Airways Limited.
I have to emphasise that the company will initially be managed by a board of directors, all of whom will be appointed by the Government. [Interruption.] As the Government will own 100 per cent. of the shares when the company is formed, it is difficult to think of anybody else who could appoint directors. That should not cause undue surprise. The board will consist of full-time executive directors and part-time non-executive directors. The role of the non-executive director is an important one and we take it very seriously. We do not indulge in political bias when we appoint those directors.
I am not sure to what extent I shall please my hon. Friends when I remind the House that Mr. Alan Fisher was reappointed to his post as a non-executive director of British Airways under this Administration. He was reappointed regardless of what any of my hon. Friends, or anyone else, may think of his activities outside British Airways. He was reappointed because he had proved himself to be a useful director. That is the sense in which the Government approach these matters. It may cause a great deal of surprise to Opposition Members that we should do that, but we do it.

Mr. Garel-Jones: In view of Mr. Alan Fisher's obvious proficiency as a director, will my hon. Friend consider making him a full-time executive director of the new company?

Mr. Tebbit: Perhaps my hon. Friend has the post of director of industrial relations or something of that sort in mind. I shall bear in mind my hon. Friend's views when it comes to the point.
The essential point is that this company will have to be run by directors in whom

the shareholders, including the Government, have confidence. The qualification for board membership will be an ability to contribute to the successful running of the airline and not to please Ministers.
Not a great deal more can be said. We dealt with the matter in Committee. I know that my hon. Friend the Member for Brentwood and Ongar differs from me. I understand his view. He finds it difficult to accept that this rather unusual proposal is right. I hope that he accepts that the Government and most of our hon. Friends believe that it is the best approach. The company will not be the Government's creature. Investors need have no fear that the company's interests will be subordinated to the whims of Ministers. This is the best way to secure investment and the company's future. I have no hesitation in commending this approach to my hon. Friends. The House would be wise to reject the new clauses.

Mr. Clinton Davis: Characteristically the Minister has avoided all the essential arguments. The debate has been characterised by the pretence by Members, with one or two exceptions, that they have a unique experise in the commercial facts of life. It is no wonder that sections of British industry are floundering.
The Minister says that there is a difference between British Aerospace and British Airways. He says that British Aerospace is a defence contractor whereas British Airways is not. That is true, as far as it goes. But he did not address himself to the general point made on Second Reading of the British Aerospace Bill by the Secretary of State for Industry that there was a strong case for having non-executive directors and that
the Government will ensure that the board of British Aerospace Limited will have the benefit of two external directors"—[Official Report, 20 November 1979; Vol. 973, c. 222.]
namely, those representative of the Government interest.

Mr. Tebbit: I am sorry to be boring, but I have just made it clear that the Government will ensure that there are non-executive directors on the board of British Airways. The only difference is that we shall not appoint the individuals concerned.

Mr. Davis: The Minister is being obtuse. The Secretary of State for Industry believes that, apart from the


arguments that the Minister adduced, it is necessary for the Government to have two representatives on the board of British Aerospace. That has been shown to be overwhelmingly right, not only in Committee but in today's debate.
The Minister is flouting the experience of the Secretary of State for Industry. I do not mind if he does, since the Secretary of State for Industry behaves curiously from time to time. However, to say that the argument is nonsense is to repudiate the arguments expressed by the Secretary of State for Industry in that important debate and in that important context. More than that, it is to repudiate the Bank of England's view. The Bank has said that it is increasingly desirable for institutional investors to play a bigger part in company activities.
The Minister said that this is an unusual way of conducting affairs. He is right. The largest investors, the Government, say in advance that they have no intention of mobilising their rights or to safeguard the majority, except in circumstances that cannot be conceived. Would any other majority shareholder renounce in advance the right to influence board decisions? That is inconceivable. The Government are behaving unintelligibly. The issue should not have been controversial. The Government should have taken the action themselves, as the Secretary of State for Industry did.
Who will appoint the directors if the institutional directors do not? The minority will do it and that is not sensible. It was never thought to be sensible for British Petroleum—and I recognise that that is a different case. The Government recognised that it was not sensible to proceed in that way with British Aerospace. There is a need for the provision contained in the new clause.
The Government eschew the experience of the European flag carriers. Even the

Swiss, who have a small Government interest, appoint Government directors in one form or another. Are the European flag carriers to be regarded as poodles of their Governments, as the hon. Member for Woking (Mr. Onslow) so elegantly said? The United States Government have deemed it appropriate to protect their airline interests in a different way. I do not believe that the Under-Secretary of State really believes that there is a totally unrestricted market enterprise philosophy in the United States.

The Minister is not interested in foreign experience except when it suits him to cite it. He has shown an unreasoning attitude. The case that he has sought to deploy is unconvincing and the House should reject it.

Mr. Garel-Jones: I wonder whether—

Mr. Speaker: The hon. Gentleman has sat down.

Mr. Garel-Jones: On a point of order, Mr. Speaker. I wonder whether—

Mr. Speaker: Order. The hon. Gentleman had better wonder about me.

Mr. Garet-Jones: On a point of order, Mr. Speaker. I wonder whether, in summing up the debate, the hon. Member for Hackney, Central (Mr. Davis) was in order in not making any reference to the fact that under the terms of the—

Mr. Speaker: Order. I think that the hon. Gentleman is about to pursue the argument. The hon. Member for Hackney, Central (Mr. Davis) made his own speech. If he has not satisfied the hon. Member I know that he will be as disappointed as I am.

Question put, That the clause be read a Second time:—

The House divided: Ayes 226, Noes 285.

Division No. 378]
AYES
[5.57 pm


Abse, Leo
Bradley, Tom
Clark, Dr David (South Shields)


Adams, Allen
Bray, Dr Jeremy
Cocks, Rt Hon Michael (Bristol S)


Anderson, Donald
Brown, Hugh D. (Provan)
Cohen, Stanley


Archer, Rt Hon Peter
Brown, Robert C. (Newcastle W)
Coleman, Donald


Armstrong, Rt Hon Ernest
Brown, Ron (Edinburgh, Leith)
Concannon, Rt Hon J. D.


Ashley, Rt Hon Jack
Buchan, Norman
Conlan, Bernard


Ashton, Joe
Callaghan, Rt Hon J. (Cardiff SE)
Cowans, Harry


Atkinson, Norman (H'gey, Tott'ham)
Callaghan, Jim Middleton &amp; P)
Cralgen, J. M. (Glasgow, Maryhill)


Barnett, Guy (Greenwich)
Campbell, Ian
Crowther, J. S.


Barnett, Rt Hon Joel (Heywood)
Campbell-Savours, Da[...]
Cryer, Bob


Bidwell, Sydney
Cant, R. B.
Cunliffe, Lawrence


Booth, Rt Hon Albert
Carmichael, Nell
Cunningham, George (Islington S)


Boothroyd, Miss Betty
Carter-Jones, Lewis
Cunningham, Dr John (Whitehaven)


Bottomley, Rt Hon Arthur (M'brough)
Cartwright, John
Dalyell, Tam




Davidson, Arthur
Janner, Hon Greville
Race, Reg


Davies, Rt Hon Denzil (Llanelli)
Jay, Rt Hon Douglas
Radice, Giles


Davis, Clinton (Hackney Central)
John, Brynmor
Rees, Rt Hon Merlyn (Leeds South)


Davis, Terry (B'rm'ham, Stechford)
Johnson, James (Hull West)
Richardson, Jo


Deakins, Eric
Johnson, Walter (Derby South)
Roberts, Allan (Bootle)


Dean, Joseph (Leeds West)
Jones, Rt Hon Alec (Rhondda)
Roberts, Ernest (Hackney North)


Dempsey, James
Jones, Barry (East Flint)
Roberts, Gwilym (Cannock)


Dewar, Donald
Jones, Dan (Burnley)
Robertson, George


Dixon, Donald
Kaufman, Rt Hon Gerald
Robinson, Geoffrey (Coventry NW)


Dobson, Frank
Kilroy-Silk, Robert
Rodgers, Rt Hon William


Dormand, Jack
Kinnock, Neil
Rooker, J. W.


Douglas, Dick
Lamble, David
Roper, John


Douglas-Mann, Bruce
Lamborn, Harry
Ross, Ernest (Dundee West)


Dubs, Alfred
Lamond, James
Rowlands, Ted


Duffy, A. E. P.
Leadbitter, Ted
Sandelson, Neville


Dunnett, Jack
Leighton, Ronald
Sever, John


Dunwoody, Mrs Gwyneth
Lestor, Miss Joan (Eton &amp; Slough)
Sheerman, Barry


Eadie, Alex
Lewis, Arthur (Newham North West)
Sheldon, Rt Hon Robert (A'ton-u-L)


Eastham, Ken
Lewis, Ron (Carlisle)
Shore, Rt Hon Peter (Step and Pop)


Ellis, Raymond (NE Derbyshire)
Litherland, Robert
Short, Mrs Renée


English, Michael
Lofthouse, Geoffrey
Silkin, Rt Hon John (Deptford)


Ennals, Rt Hon David
Lyon, Alexander (York)
Silverman, Julius


Evans, Ioan (Aberdare)
Lyons, Edward (Bradford West)
Skinner, Dennis


Evans, John (Newton)
Mabon, Rt Hon Dr J. Dickson
Smith, Rt Hon J. (North Lanarkshire)


Ewing, Harry
McCartney, Hugh
Soley, Clive


Faulds, Andrew
McCrindle, Robert
Spearing, Nigel


Field, Frank
McDonald, Dr Oonagh
Spriggs, Leslie


Fitch, Alan
McElhone, Frank
Stallard, A. W.


Flannery, Martin
McGuire, Michael (Ince)
Stoddart, David


Fletcher, Ted (Darlington)
McKay, Allen (Penistone)
Stott, Roger


Foot, Rt Hon Michael
McKelvey, William
Strang, Gavin


Ford, Ben
MacKenzie, Rt Hon Gregor
Straw, Jack


Forrester, John
Maclennan, Robert
Summerskill, Hon Dr Shirley


Foster, Derek
McNally, Thomas
Taylor, Mrs Ann (Bolton West)


Fraser, John (Lambeth, Norwood)
McWilliam, John
Thomas, Dafydd (Merioneth)


Freeson, Rt Hon Reginald
Magee, Bryan
Thomas, Mike (Newcastle East)


Garrett, John (Norwich S)
Marks, Kenneth
Thomas, Dr Roger (Carmarthen)


George, Bruce
Marshall, David (Gl'sgow, Shetlles'n)
Thorne, Stan (Preston South)


Gilbert, Rt Hon Dr John
Marshall, Jim (Leicester South)
Tilley, John


Ginsburg, David
Mason, Rt Hon Roy
Tinn, James


Golding, John
Maxton, John
Torney, Tom


Gourlay, Harry
Maynard, Miss Joan
Varley, Rt Hon Eric G.


Graham, Ted
Meacher, Michael
Wainwright, Edwin (Dearne Valley)


Grant, George (Morpeth)
Mikardo, Ian
Walker, Rt Hon Harold (Doncaster)


Grant, John (Islington C)
Millan, Rt Hon Bruce
Watkins, David


Hamilton, James (Bothwell)
Mitchell, R. C. (Soton, Itchen)
Wellbeloved, James


Hamilton, W. W. (Central Fife)
Morris, Rt Hon Alfred (Wythenshawe)
Welsh, Michael


Harrison, Rt Hon Walter
Morris, Rt Hon Charles (Openshaw)
White, Frank R. (Bury &amp; Radcliffe)


Hart, Rt Hon Dame Judith
Morris, Rt Hon John (Aberavon)
White, James (Glasgow, Pollok)


Hattersley, Rt Hon Roy
Moyle, Rt Hon Roland
Whitehead, Phillip


Haynes, Frank
Newens, Stanley
Whitlock, William


Healey, Rt Hon Denis
Oakes, Rt Hon Gordon
Willey, Rt Hon Frederick


Heffer, Eric S.
Ogden, Eric
Williams, Rt Hon Alan (Swansea W)


Hogg, Norman (E Dunbartonshire)
O'Halloran, Michael
Wilson, William (Coventry SE)


Home Robertson, John
O'Neill, Martin
Winnick, David


Homewood, William
Orme, Rt Hon Stanley
Woodall, Alec


Hooley, Frank
Owen, Rt Hon Dr David
Woolmer, Kenneth


Horam, John
Palmer, Arthur
Wrigglesworth, Ian


Howell, Rt Hon Denis (B'ham, Sm H)
Park, George
Wright, Sheila


Huckfield, Les
Parker, John



Hudson Davies, Gwilym Ednyfed
Pendry, Tom
TELLERS FOR THE AYES:


Hughes, Mark (Durham)
Powell, Raymond (Ogmore)
Mr. George Morton and Mr. Austin Mitchell.


Hughes, Roy (Newport)
Price, Christopher (Lewisham West)





NOES


Adley, Robert
Boscawen, Hon Robert
Butcher, John


Aitken, Jonathan
Bottomley, Peter (Woolwich West)
Butler, Hon Adam


Alexander, Richard
Bowden, Andrew
Cadbury, Jocelyn


Amery, Rt Hon Julian
Boyson, Dr Rhodes
Carlisle, Kenneth (Lincoln)


Ancram, Michael
Braine, Sir Bernard
Carlisle, Rt Hon Mark (Runcorn)


Arnold, Tom
Bright, Graham
Chalker, Mrs Lynda


Atkins, Robert (Preston North)
Brinton, Tim
Channon, Paul


Baker, Kenneth (St. Marylebone)
Brittan, Leon
Chapman, Sydney


Baker, Nicholas (North Dorset)
Brocklebank-Fowler, Christopher
Clark, Hon Alan (Plymouth, Sutton)


Beaumont-Dark, Anthony
Brooke, Hon Peter
Clark, Sir William (Croydon South)


Bell, Sir Ronald
Brotherton, Michael
Clarke, Kenneth (Rushcliffe)


Bendall, Vivian
Brown, Michael (Brigg &amp; Sc'thorpe)
Clegg, Sir Walter


Benyon, W. (Buckingham)
Bruce-Gardyne, John
Cockeram, Eric


Best, Keith
Bryan, Sir Paul
Colvin, Michael


Bevan, David Gilroy
Buchanan-Smith, Hon Alick
Cope, John


Blackburn, John
Buck, Antony
Cormack, Patrick


Blaker, Peter
Budgen, Nick
Corrie, John


Body, Richard
Bulmer, Esmond
Costain, A. P.


Bonsor, Sir Nicholas
Burden, F. A.
Cranborne, Viscount







Critchley, Julian
Kellett-Bowman, Mrs Elaine
Pym, Rt Hon Francis


Crouch, David
Kimball, Marcus
Raison, Timothy


Dean, Paul (North Somerset)
Kitson, Sir Timothy
Rathbone, Tim


Dickens, Geoffrey
Knox, David
Rees, Peter (Dover and Deal)


Dorrell, Stephen
Lamont, Norman
Rees-Davies, W. R.


Douglas-Hamilton, Lord James
Lang, Ian
Rhodes James, Robert


Dover, Denshore
Langford-Holt, Sir John
Rhys Williams, Sir Brandon


du Cann, Rt Hon Edward
Latham, Michael
Ridley, Hon Nicholas


Dunn, Robert (Dartford)
Lawrence, Ivan
Ridsdale, Julian


Durant, Tony
Lawson, Nigel
Rifkind, Malcolm


Dykes, Hugh
Lee, John
Rippon, Rt Hon Geoffrey


Eden, Rt Hon Sir John
Lester, Jim (Beeston)
Roberts, Michael (Cardiff NW)


Edwards, Rt Hon N. (Pembroke)
Lewis, Kenneth (Rutland)
Roberts, Wyn (Conway)


Eggar, Timothy
Lloyd, Ian (Havant &amp; Waterloo)
Rost, Peter


Elliott, Sir William
Lloyd, Peter (Fareham)
Royle, Sir Anthony


Emery, Peter
Loveridge, John
Sainsbury, Hon Timothy


Eyre, Reginald
Luce, Richard
St. John-Stevas, Rt Hon Norman


Fairgrieve, Russell
Lyell, Nicholas
Scott, Nicholas


Faith, Mrs Sheila
Macfarlane, Neil
Shaw, Michael (Scarborough)


Farr, John
MacGregor, John
Shelton, William (Streatham)


Fell, Anthony
MacKay, John (Argyll)
Shersby, Michael


Fenner, Mrs Peggy
Macmillan, Rt Hon M. (Farnham)
Silvester, Fred


Finsberg, Geoffrey
McNair-Wilson, Michael (Newbury)
Sims, Roger


Fisher, Sir Nigel
McNair-Wilson, Patrick (New Forest)
Skeet, T. H. H.


Fletcher, Alexander (Edinburgh N)
McQuarrie, Albert
Speed, Keith


Fletcher-Cooke, Charles
Madel, David
Speller, Tony


Forman, Nigel
Major, John
Spence, John


Fowler, Rt Hon Norman
Marland, Paul
Spicer, Jim (West Dorset)


Fox, Marcus
Marlow, Tony
Spicer, Michael (S Worcestershire)


Fraser, Rt Hon H. (Stafford &amp; St)
Marshall, Michael (Arundel)
Sproat, Iain


Fraser, Peter(South Angus)
Marten, Neil(Banbury)
Squire, Robin


Fry, Peter
Mates, Michael
Stanbrook, Ivor


Galbraith, Hon T. G. D.
Mather, Carol
Stanley, John


Gardiner, George (Reigate)
Maude, Rt Hon Angus
Steen, Anthony


Gardner, Edward (South Fylde)
Mawby, Ray
Stevens, Martin


Garel-Jones, Tristan
Mawhinney, Dr Brian
Stewart, Ian (Hitchin)


Glyn, Dr Alan
Maxwell-Hyslop, Robin
Stewart, John (East Renfrewshire)


Goodhew, Victor
Mayhew, Patrick
Stokes, John


Goodlad, Alastair
Mellor, David
Stradling Thomas, J.


Gorst, John
Meyer, Sir Anthony
Tapsell, Peter


Gower, Sir Raymond
Mills, Iain (Meriden)
Taylor, Robert (Croydon NW)


Gray, Hamish
Mills, Peter (West Devon)
Taylor, Teddy (Southend East)


Griffiths, Eldon (Bury St Edmunds)
Miscampbell, Norman
Tebbit, Norman


Griffiths, Peter(Portsmouth N)
Mitchell, David (Basingstoke)
Temple-Morris, Peter


Grimond, Rt Hon J.
Moate, Roger
Thomas, Rt Hon Peter (Hendon S)


Grist, Ian
Molyneaux, James
Thompson, Donald


Grylls, Michael
Monro, Hector
Thorne, Nell (Ilford South)


Gummer, John Selwyn
Montgomery, Fergus
Thornton, Malcolm


Hamilton, Hon Archie (Eps'm&amp;Ew'll)
Moore, John
Townend, John (Bridlington)


Hamilton, Michael (Salisbury)
Morgan, Geraint
Townsend, Cyril D. (Bexleyheath)


Hampson, Dr Keith
Morris, Michael (Northampton, Sth)
van Straubenzee, W. R.


Hannam, John
Morrison, Hon Charles (Devizes)
Vaughan, Dr Gerard


Haselhurst, Alan
Morrison, Hon Peter (City of Chester)
Viggers, Peter


Hastings, Stephen
Mudd, David
Waddington, David


Havers, Rt Hon Sir Michael
Murphy, Christopher
Wakeham, John


Hawksley, Warren
Myles, David
Waldegrave, Hon William


Hayhoe, Barney
Neale, Gerrard
Walker, Bill (Perth a E Perthshire)


Heath, Rt Hon Edward
Needham, Richard
Walker-Smith, Rt Hon Sir Derek


Heddle, John
Nelson, Anthony
Wall, Patrick


Henderson, Barry
Neubert, Michael
Walters, Dennis


Heseltine, Rt Hon Michael
Newton, Tony
Ward, John


Hicks, Robert
Nott, Rt Hon John
Watson, John


Higgins, Rt Hon Terence L.
Onslow, Cranley
Wells, John (Maidstone)


Hogg, Hon Douglas (Grantham)
Oppenheim, Rt Hon Mrs Sally
Wells, Bowen (Hert'rd &amp; Stev'nage)


Holland, Philip (Carlton)
Page, Rt Hon Sir R. Graham
Wheeler, John


Hooson, Tom
Page, Richard (SW Hertfordshire)
Whitelaw, Rt Hon William


Hordern, Peter
Parkinson, Cecil
Whitney, Raymond


Howell, Rt Hon David (Guildford)
Patten, Christopher (Bath)
Wickenden, Keith


Howell, Ralph (North Norfolk)
Patten, John (Oxford)
Wiggin, Jerry


Howells, Geraint
Pattie, Geoffrey
Williams, Delwyn (Montgomery)


Hunt, David (Wirral)
Pawsey, James
Winterton, Nicholas


Hunt, John (Ravensbourne)
Peyton, Rt Hon John
Wolfson, Mark


Irving, Charles (Cheltenham)
Pollock, Alexander
Young, Sir George (Acton)


Jenkin, Rt Hon Patrick
Porter, George



Johnson Smith, Geoffrey
Price, David (Eastleigh)
TELLERS FOR THE NOES:


Jopling, Rt Hon Michael
Prior, Rt Hon James
Mr. Spencer Le Marchant and Mr. Anthony Berry.


Joseph, Rt Hon Sir Keith
Proctor, K. Harvey



Kaberry, Sir Donald

Question accordingly negatived.

New Clause 6

GOVERNMENT SHAREHOLDING IN SUCCESSOR COMPANY

"Pursuant to the powers vested in him by section 3 to this Act the Secretary of State shall retain at least 51 per cent. of the issued shares".—[Mr. Clinton Davis.]

Brought up, and read the First time.

Mr. Clinton Davis: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this, we may take new clause 16—Restriction on disposal of Secretary of State's shareholding—and new clause 17—Secretary of State's majority shareholding.

Mr. Davis: Some of the arguments about the Government's retaining a 51 per cent. shareholding in the successor company have been rehearsed in the previous debate. I noticed a different nuance in the way in which the Minister approached the question of retaining a majority interest as against the message that he sought to convey in Committee. When I have put forward my evidence to support that contention, I shall give way to the Minister if he wishes to reply. I wish to quote a number of the Minister's remarks in Committee. He said:
it is the Government's policy to maintain a majority holding in the shares.
As a way of exhibiting confidence in the company, he said:
We still have sufficient confidence…to maintain our 51 per cent. shareholding."—[Official Report, Standing Committee B, 29 January 1980; c. 233–4.]
The Minister said also:
as far as I can see ahead at the moment, it will be desirable for the Government to retain a majority holding."—[Official Report, Standing Committee B, 31 January 1980; c. 307.]
Later on he said something of the same nature, as reported in c. 416 of Hansard.
In what circumstances would that desirability to retain a Government shareholding change? Does the Minister foresee that it is likely to change within the next year, two years or three years? He said today that it was the present intention of the Government. That represents a difference of emphasis at the very least. If the Minister would like me to give way on that point, I shall be happy to do so.

Mr. Tebbit: It might shorten the debate if I respond now. The hon. Gentle-

man will recollect that when I said that it would be as far ahead as I could see, I made it clear that I was not willing to say how far that was. I said that the Government
will not seek to control even whilst they hold the majority shareholding.
I said also:
I have never bound the Government in the long term to maintaining a majority shareholding. I have not said that our plans would be to dispose of it, but I have not bound the Government to it."—[Official Report, Standing Committee B, 13 March 1980; c. 956.]
That remains the position. I do not wish to alter the impression that springs from the remarks that I made in Committee.

Mr. Davis: We emerge with the position that the Minister did not intend to convey a different impression from that which he conveyed in Committee. He argued in Committee that to maintain a majority shareholding would depict a continuing Government confidence in the airline, that it was desirable to do so, that it represented a good investment and that he had confidence in that investment. The House will be grateful to the Minister for adhering to that view, because I believe that he conveyed a somewhat different impression today.
6.15 pm
The Secretary of State made that point either on Second Reading or in questioning when he first introduced his policy before the Conservative Party conference. It was before the conference because he wanted to exhibit his well-known virility to the ladies who attended. Each to his own taste; and that is the way that the Minister chose it to be.
Alitalia has a 90 per cent. Government share; KLM, 70 per cent.; Lufthansa about 80 per cent.; SAS, 50 per cent.; and Swissair about 12 per cent. Apart from Swissair, those enterprises felt that it was necessary to retain a majority interest. One of the reasons for that is the very reason adduced by the Minister—at least in part to justify his retention of a 51 per cent. interest—namely, to exhibit confidence in the State carrier. They regard that as important in the air service negotiations that have to be undertaken.
In Committee, the hon. Member for Tynemouth (Mr. Trotter), in an interesting intervention said:
I have always worked on the assumption that there would be a majority public shareholding in British Airways. If there is not to


be a public shareholding, that would be a very different concept from the one I envisaged."—[Official Report, Standing Committee B, 29 January 1980; c. 206.]
The impression was clearly conveyed to the hon. Gentleman that this was not a temporary policy but something to be continued because, as the Minister said, it was desirable to do so. We are left in some doubt about where the Government stand. Perhaps the Government prefer us to be left in some doubt. We believe that the whole concept of the sale of British Airways shares is misbegotten. It is one that the Government have pursued because it is doctrinaire-ridden. There is very little to commend it. In the present international airline industry it is difficult to conceive how, in the next few years, the shares will become an attractive proposition.
A status report on the United States airlines prepared by a company called Paine Webber Mitchell Hutchins Inc concluded that there would be lower airline earnings in 1980. There is nothing controversial about that. It said that there would be no big earnings recovery in 1981. It said:
In order to achieve large near term gains in stock prices, a large rebound in 1981 is a must. Otherwise, the group may continue to drift lower and/or at best offer dead money for some time. Neither possibility argues for heavily owning these stocks.
That was a description of the United States market. Even though British Airways may have emerged from the crisis of 1979–80 in a rather more favourable position than many of their competitors, that is nothing to write home about. They only managed to break even.
The position affecting British Airways and most other airlines in the world is not optimistic for the next few years. What sort of track record does that provide for any flotation of shares? I believe that the Government have recognised that. They have not proceeded with the Report stage at any pace. We have been out of Committee for a long time. There does not appear to be much urgency even though for some extraordinary reason—which I can only believe is connected with that which I have already attributed to the Secretary of State—the Government were in such a rush in July of last year. Now they have decided to go slow. They would do better to forget about it altogether. That would be the best way to remove the anxiety that is being caused

at the moment to our flag carrier. It has enough to contend with already in the very difficult field of international competition, without having these unnecessary anxieties imposed upon it. A great deal of uncertainty is introduced for no good reason.
How would it benefit productivity? How would it benefit better industrial relations? Would it not help to stabilise the position and help to erase the anxieties of the work force if the Government were to say "We were wrong. We did not listen to anybody when we decided to embark upon this proposal. Now we have decided that this is a completely wrong climate in which to introduce it." That would be the best way to provide the reassurance about which the Minister spoke in Committee—to drop this madcap scheme altogether.
The hon. Gentleman then said that it would be a good thing, at least for the time being—I do not want to put any words into his mouth—if the Government were to maintain a 51 per cent. interest, because it was a good deal for the taxpayer. That is the view he takes. If it is such a good deal for the taxpayer, why not keep all the shares, taking the argument on that basis? The Minister should feel bound to answer that point tonight.
The Government have refused to say how many shares or what proportion of the shares they intend to float, or when they intend to do it. I can understand the Government's reticence about speculating as to when they might float the shares. In fairness to the Minister, he made a compelling point about why the prospectus should not be made the subject of a statutory instrument. Indeed, we have decided not to pursue the point for that very reason. Nevertheless, if the Government are to retain a 50 per cent. interest, the taxpayer is entitled to know rather more than the Government have begun to disclose about their objectives.
The Minister said, in relation to the 51 per cent. argument, that it is a balance. He has not suggested that we are indulging in a weird fantasy here, as no doubt would be suggested by the hon. Member for Woking (Mr. Onslow). The Minister has said that it is a balance, and a fairly fine balance at that. The Minister argued:
Not all policies have to be set in statute. I think that is the best defence I can make"


—[Official Report, Standing Committee B, 31 January 1980; c. 307.]
That is most charming, and I know the hon. Gentleman to be very charming from time to time—contrary to the experience of some of my hon. Friends. We enjoyed him in Committee; he was good value. But that is a pretty flimsy defence. If I had suggested such a thing when I was a Minister, the hon. Gentleman would have sailed in with all guns blazing. It is a totally flimsy defence. Many important policies have to be set out in statute, and this is one of them.

Mr. Tebbit: In my own defence, I think I ought to read what I said:
I think that is the best defence I can make in many ways against the blandishments of the right hon. Gentleman in offering me all these alluring alternatives of possible holdings which the Government might have in the future company."—[Official Report, Standing Committee B, 31 January 1980; c. 307.]
That was in the context of an offering of various percentages which the Government should by statute hold. I take the hon. Gentleman's point, but I have to defend myself, at least mildly.

Mr. Davis: That is a bit of mitigation, as they say in the criminal courts, rather than defence. The hon. Gentleman is not acquitted of the charge. He went on to say that he could not bind his successors. That is an extraordinary argument. That is precisely what he is trying to do by the Bill—to bind his successors. The best way for him not to bind his successors is not to embark on the legislation. That is another very good reason for not doing it.
It would be perfectly reasonable—even basing the case on the hon. Gentleman's arguments—for him to accept the clause, which, according to him, is finely balanced. What we find difficult to accept is the argument "Trust me, trust Norm, everybody's good friend". I do not think that he would have trusted us, and I am not sure that I should trust him.
Whatever feelings of friendship I have towards the hon. Gentleman from time to time—and sometimes we forget those—we are a little sceptical of some of the promises made by Ministers in this Government. The Government are sceptical about some "norms", and I do not know why they should make an exception here. After the record of the last 13 or 14

months over prescription charges, which were not to be increased, and over the doubling of VAT, and so on, it is asking a bit too much to expect us to repose our trust in him.
I turn to new clauses 16 and 17. They may not be the last word in drafting. The Opposition do not have the benefit—if it is a benefit—of the parliamentary draftsman. Sometimes, as I know from experience, he can create certain difficulties. I can say that now, but the Minister cannot.
In new clauses 16 and 17, we are suggesting alternative approaches.
New clause 16 suggests that the Government should not dispose of a total holding at any given time
exceeding ten per cent. of the shares…without the prior approval of both Houses of Parliament".
It also suggests that such approval should not be sought except within certain specific periods.
The alternative approach to that, in new clause 17, is that the Government should not
relinquish majority control…without first obtaining the approval of both Houses of Parliament".
There is also a similar provision as to the time within which that can be done. There is nothing very important about the timing. That could be changed if it were thought to be wrong. The Minister is always fair enough to concede that we are debating a principle.
If the Government intend to embark upon a change from majority shareholding, they should be obliged to come to the House. They would probably get their way if it happened during the lifetime of this Parliament, because they have a secure majority, but at least the House would be able to comment on the matter; it would be drawn specifically to the attention of the public. When we are talking about such a valuable stake in a national enterprise, the Government should do no less.
If the argument has been finely balanced before in regard to the much more general way in which we have approached the matter, surely the Government will be reasonable and say that there is something in the argument, and that they will at least look at it carefully before the Bill is debated in another place.


We submit that either of these propositions is reasonable, and in particular we commend new clause 17.
There is a burden that lies very heavily on the shoulders of the hon. Gentleman to indicate why it would be wrong for Parliament to exercise this measure of scrutiny or surveillance—it is hardly control—over the position. I hope that the hon. Gentleman will respond positively in the way that I have invited him to do.

Mr. Sheerman: It is repetitious to say that I do not intend to speak for very long on this group of new clauses. It will be evident to those who sat for long hours in Committee that at times we had very enlightened debates there. To a relatively new Member such as myself, it is surprising that we reach this stage debating on the Floor of the House arguments on amendments that we rehearsed through previous months. We have in our hands the collected works of our travail over the months. Perhaps these impress the public, our electors, through the large number of words and column inches. But one wonders: all for what? Brilliant arguments were advanced in Committee on the Opposition Benches. There were erudition and rapier wit and thrust, sometimes on both sides of the Committee. But here we are debating the same points as we made in Committee. Opposition Members seem to have convinced the Government side of very little, and vice versa. It is a sad reflection that the Committee system ends up in a voting system in which most of those concerned have not been intimately connected with the debate.
Many of us have become quite expert—I say that with due modesty—about aviation. I represent part of Huddersfield, which is not close to any of our great airports. My constituency has interests in trade, textiles, chemicals and engineering. Aviation seems to be a far cry from my constituency interests. However, my constituents are extremely concerned about the new clauses and the principles locked into them. That is because they are the one guarantee that they might have about a little bit of investment that they made years ago. Like all good investments, perhaps this one was made on their behalf by people whom they had elected to represent them over

the years. Since 1945 many of my constituents have lived in the fond hope and belief that successive Governments have acted in the national interest. In Committee we had some debates on the national interest which would have done justice to departments of political theory. We debated the concept and nature of the national interest. I suppose that we had quite an average university seminar on the subject. All that we concluded was that we would have to agree to disagree about it.
I put the national interest simply as it strikes most of my constituents. It is the belief that the Government are elected to serve the people—not just the Conservative Party or the Labour Party, but all the people whose hopes and futures are bound up in what we call the common good. I believe that British Airways is seen as a part of some collective common good, common weal, call it what one may. I believe that most people believe that British Airways is theirs, that they own it, and that in some ways they should have a Government representing them who recognise that fact and who believe that their interests should be served over a long period, and not just over a period of time in which Governments come and go. My hon. Friend the Member for Batley and Morley (Mr. Woolmer), whose constituency borders mine, has made the very good point that it is absolutely right that across the party divide there are issues which must be of common concern over a far greater number of years than the four or five for which most Governments exist.
I believe that this is a particular case in point. We are talking about the percentage of shares which will be vested in the Government and the percentage which will be sold off on the stock market. Conservatives, be it at their party conference or in this House, very often talk about entrepreneurial abilities and talents. It seems that, if the Conservative Party has a mandate, Conservatives would say that it is to unleash the entrepreneurial instinct and talent under the present Government. Given their lights, we can see them going about that task.
However, from the Opposition Benches it often looks as though, instead of unleashing entrepreneurial talent and giving opportunities for men and women who can put land, labour and capital together in order to produce a product which


people want to buy around the globe, when Governments proclaim this commitment they are very often working less on the mentality of the entrepreneur and more on the ethos and morals of the market trader. It seems to me that "the market trader" is much more of a description which applies to the Under-Secretary. I do not say that in a rude way. We certainly do not want to reduce the level of the debate. However, there he is, representing the Crown in this matter and giving us assurances about the future of British Airways, but he cannot prevent us from suspecting that what he has on the front of his barrow—the nice, shiny, rosy apples—are not even for the Opposition's consumption, and that the seedy, maggoty apples lying behind the up-front display are the bitter apples which must be eaten not only by the electorate and at a Conservative Party conference but also by those liberal elements which exist within the Conservative Party.
The reason why we are making our case very strongly is that when the Minister is talking about the case against the amendment—I refer particularly to the question of the 51 per cent. shareholding—what he is really doing is speaking over his shoulder to the more liberal and enlightened elements of his own party, because they know very well of the commitment to British Airways as a national institution, a national investment and a public enterprise, of which most people are relatively proud.
There is a sizable element within the Conservative Party, both within the House and outside it, to whom the Minister is talking in order to try to persuade them that the rosy apples that he displays are the real goods which they will be getting. I illustrate that by saying that what they are being offered and what was explained to us in Committee is that we are not really denationalising a national institution and a national investment just at a stroke. People got rather fed up with the "at a stroke" mentality or illustration. What the Conservatives are doing, according to the Under-Secretary, is very gradually injecting a bit of entrepreneurial ability, a bit more commercial mindedness, and just changing a little the general picture within British Airways. It is quite civilised and is something with

which every intelligent Young Conservative would agree.

Mr. Woolmer: An intelligent Young Conservative?

Mr. Sheerman: If there is such a creature.
We cannot pin the Minister down. We used to refer to him affectionately in Committee as a polecat, but he preferred to be known as a ferret, ready to attack any rabbits that came within range. The Minister is providing a set-up which will con the electorate and elements in his own party into believing that, under the guise of gradualism, the party will nibble into British Airways. In fact, this Bill will provide the apparatus for selling off BA, probably for far less than it is worth, to sections of the community who are wealthy enough to take on the shares when they are offered at an appropriately inauspicious moment.
We are genuinely concerned that a national investment will be offered for sale when the Government are in a tight corner, the balance of payments is in a bad way, the Chancellor's economic nostrums are working even less well, and the Government have their backs to the wall. In order to do something to retrieve the position, we fear that they will sell off BA at a knockdown price. That would be the worst kind of tragedy.
The Minister will probably assure us that this is a nightmare and that it is based on fantasy, that no one with common sense could possibly subscribe to it. But I urge hon. Members to take seriously a national institution and an investment made on people's behalf over generations.
Most people in this country do not invest in stocks and shares. They do not even have a friendly bank manager in the wardrobe to advise them. A high proportion do not have a bank account. They would not know a stockbroker if he knocked them down in the City. They are not familiar with financial institutions. Many do not even have a Post Office Savings Bank book. But they realise, in an inchoate way, that they have an investment, they have put something by for a rainy day, in British Airways.
Such people have every right to expect financial probity, common sense and honesty from the custodians of their wealth.


Perhaps I am being rather simple—[HON. MEMBERS: "Hear, hear."] Perhaps, but a simple attitude to complex problems—attempting to understand rather than give answers—is often a great advantage in political life. A more simplistic approach to problems is often what is needed.
I ask the Government to respond to the belief that they are the custodians of a great heritage and a great piece of wealth owned by millions of people. They should take a more responsible attitude to this parcel of wealth. Rather than creating a structure which will allow future Governments to sell off BA lock, stock and barrel, they should act in the interests of the British people and of the future of democratic government.
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The Government, even at this late date, could change their minds about how many shares they will sell and even give us a positive assurance such as we are used to from men and women of conviction. I thought that this was the era of conviction politics, when a politician would say "I believe that this will be the position now and for as long as my reputation is nailed to the mast of this Government."
I have often pressed the Under-Secretary of State to be converted. I gave him many chances in Committee to erect the Tebbit memorial to integrity and to conversion on the road to Damascus. I ask him tonight to say that, so long as his colours are nailed to the mast in this matter, the Government will retain a 51 per cent, stake in this company, that that is the only way to ensure that this public wealth and investment is looked after properly. I ask him to say that the Government will not sell off this wealth to speculators and sharp operators.
We know that these are not good years for selling off such an operation as British Airways. If we are not careful, it will become a point of principle in the Conservative Party—a sort of reverse logic—that they must sell off at least 49 per cent., if not more, by the next general election. If that is so, a grave disservice will be done to the people of this country. I ask the Government to think again.

Mr. Michael McNair-Wilson: If I really believed that the Government were seeking to sell off a British asset, to deprive the taxpayer of his

inheritance, I might find some sympathy in my heart for new clause 6. But I do not believe that the hon. Member for Huddersfield, East (Mr. Sheerman) believes that proposition any more than I do. He must recognise, as I, and the Government, have recognised, that British Airways will need new entrepreneurial skills if they are to hold their place in the market.
I call in aid of that statement, first, British Airways' own annual report. On page 8, it says:
British Airways has always believed firmly that a strong entrepreneurial spirit is needed for effective marketing of its passenger, cargo and mail capacity This approach has also been employed to good effect in the profitable management of our relevant ancillary activities.
So BA recognises that entrepreneurial skill is required, of the sort that Sir Freddie Laker has so amply demonstrated by the enormous one-man revolution he has created in the world's airlines, the sort of skill that Mr. Adam Thomson brought into the second force with British Caledonian, an airline which manages to operate successfully and profitably without any of the appalling events with which the hon. Member for Huddersfield, East, sought to terrify the House—about BA falling into the hands of sharp operators who would bring this great airline to its knees.
I believe that new clause 6 highlights the objective of the Bill. Of course the Opposition were bound to move it because, if they were successful, the Bill would fail in one of its main tenets. The Opposition would be sentencing British Airways to continued nationalisation without any arguments in favour of nationalisation as such. It is as if they were saying that British Airways has been supremely successful as a nationalised corporation and therefore it should remain that way.
I question that premise immediately. I do so as a former member of the Select Committee on Nationalised Industries—a Select Committee which we may have to reconstitute. That Committee started to provide the sort of accountability that nationalised industries for too many years had not been forced to meet. I accept that the Committee was an imperfect weapon. Here I pay tribute to the hon. Member for Feltham and Heston (Mr. Kerr), who is not here at present. He


recognised that if that Select Committee was to do the job that Parliament had set it up to do, it would have to make the nationalised industries recognise that they could no longer live in an ivory tower, accountable to no one. He insisted that each one of them brought their annual reports before our Committee, and we went through those reports just like shareholders going through the general meeting.
Bit by bit we began to create the concept of accountability and the need for the chairmen of those great industries to account to Parliament for the way in which they had discharged their duties. That Select Committee has gone now, and without it, accountability has gone. I know that annual reports are sent to the Secretary of State and that they are still obtainable in the Vote Office, but thereafter there is no further process, or anything that any of us in Parliament can do. Therefore, the taxpayers' money, which is so often indulged in large sums by the Government in nationalised industries, is no longer a matter for us in this Chamber. The money is spent on our behalf and we are told in that gladsome phrase that we own the nationalised industries. Why are we not rejoicing? The answer is that we are not always convinced that our money has been spent in the most effective way.

Mr. Clinton Davis: How does the hon. Member perceive that there is accountability as long as the Government persist in the policy of retaining a majority shareholding in the successor company? How is that public accountability to be demonstrated? Does the hon. Member believe that it should be there at all?

Mr. McNair-Wilson: I had the good fortune to be on the Select Committee on Nationalised Industries when British Petroleum came before it. I heard the then chairman of BP explain that, although the Government owned 49 per cent. of the company, he felt, in almost every sense, that it operated as if it were in the private sector. That meant that the company accepted the disciplines of the private sector. It accepted the need to prove to its shareholders that it was administering its business as well as it knew how and using its assets to the greatest possible benefit, both of the company and the shareholders.

Mr. Clinton Davis: Is the hon Member casting serious aspersions on the present board of British Airways? Certainly the Minister did not do so. Is the hon. Member saying that the board is not carrying out its duties properly, or not at all?

Mr. McNair-Wilson: The hon. Member must not put words into my mouth. He asked me how I saw the future of British Airways when the Government no longer owned 51 per cent. of the shares. I used the example of British Petroleum to illustrate that this would have a profound effect on British Airways. That did not in any sense suggest that the present management was deficient in the discharge of its duties.
I well remember the inquiry of the Select Committee into British Airways just after BOAC and BEA had amalgamated. I remember that one of the witnesses before the Select Committee said that the result of the amalgamation was to create not one airline, but three. He claimed that there were three different groups of people fighting each other to have the final say. There were the new people in British Airways, and the old people from the other two companies. If that is so—and I suspect that there is some truth in it—it could be that this gigantic airline with its many subsidiaries and offshoots into other areas of commerce, has grown too big to be managed successfully. It may be that the idea of profit centres has been lost because the airline has become so gargantuan. It may well be that, looked at in a commercial light, some very exciting changes could occur in its structure to make it more effective.

Mr. Clinton Davis: What does that mean?

Mr. McNair-Wilson: It means that the first thing that the new management will have to decide is whether the structure of British Airways is right. The hon. Gentleman knows that the structure has been changed at least twice since British Airways were set up three or four years ago. If one has to change the management structure twice after such a short time, one is bound to ask whether that structure is right. Those running the airline are clearly not convinced that it is right.
Secondly, we must ask ourselves whether a proper return on the assets


available to British Airways is being obtained. British Airways admit that they have fallen down on their target this year and in other years. Then, of course, the advantage of being a commercial enterprise, as opposed to a State-dominated one, is that commercial considerations will come to the fore to a much greater extent. Instead of the meddling of Ministers—and I hope that my hon. Friend will not take offence—we shall see the true managerial functions of those running the airline coming into play. No doubt they will use the atrophied muscle that they have at present—human ingenuity, ideas and improvisation—to ensure that the airline is modern in every aspect of its management approach. Again, many people will say that British Airways' management is not as good as it should be and because of that the airline is not able to meet its targets.

Mr. Sheerman: What evidence does the hon. Member have for that statement? This is a serious attack on the quality of British Airways' management. I have found that management to be very good and full of entrepreneurial talent. This is the nub of the Bill. Why are we ruining a perfectly good, efficient nationalised corporation? It has a good record, it is profitable. By what criteria does the hon. Member claim that it is unsuccessful?

Mr. McNair-Wilson: Before I answer the hon. Member, I must say that I am glad to see the hon. Member for Feltham and Heston in the Chamber. He knows that just before the general election last year the Select Committee on Nationalised Industries started an inquiry into British Airways with the task of looking at its management structure and its effectiveness as a nationalised corporation. We did not start the inquiry merely for the sake of doing so. It was started because we each had a playback to the effect that matters were not as right as they should be at British Airways. Although we did not complete the inquiry, the hon. Gentleman should not imagine that everything in the garden was, is and always will be, rosy.

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Mr. Russell Kerr: I hesitate to interrupt, as the hon. Gentleman has a wide knowledge of certain aspects of nationalised industries. One of the tenets of that hard-working Committee was to let

the facts speak for themselves. I should hate to think that there was any imputation against the record of British Airways. We did not reach a collective view about British Airways being worth-while or otherwise. As an old stager on the Committee, the hon. Gentleman would be the last person to wish such an imputation to exist without proper evidence to support it.

Mr. McNair-Wilson: The inquiry made little progress because of the election. It is no less than the truth that we set up the inquiry because there was concern. Our inquiry never proved whether that concern was genuine. At a meeting at London airport we put to Mr. Ross Stainton and his colleagues some of the problems that worried us. There may be minutes of that meeting available for hon. Members to read.
We should not assume that everything in British Airways' garden is rosy. I do not believe that even British Airways believes that to be so. The chairman's statement says:
At £110 million, the result, while satisfactory in a difficult year for the airline industry, is nonetheless some £30 million short of British Airways' own target.
When British Airways is prepared to state that it has fallen short by 20 or 30 per cent. of what it hoped to achieve it is difficult to say that everything is rosy.

Mr. Clinton Davis: The hon. Gentleman will want to be fair. At present little is rosy for the aviation business, in particular for American airlines, having regard to their returns over the past year.

Mr. McNair-Wilson: I shall not pursue the broader point about American airlines. I repeat the words of the chairman of British Airways:
At £110 million, the result, while satisfactory in a difficult year for the airline industry, is none the less some £30 million short of British Airways' own target.
Doubtless that shortfall can be explained, but it is not unreasonable to say that something better could be achieved.
I quoted the remark that British Airways is now three airlines. As chairman of BEA, Sir Anthony Milward, understood as well as anyone the problems of amalgamating two airlines that do essentially different jobs. When asked whether he thought that the amalgamation made sense, he said that he did not believe that


it was possible to run a single airline when there were long haul and short and medium haul operations which required different skills and types of aircraft. He believed that even though the airlines were given the single name of British Airways, that would not get over the problems of managing such an enterprise or produce a better airline. That advice was not taken, and British Airways emerged.
The Government are asking themselves whether British Airways has failed to meet its targets as often as it could because of circumstances outside its control or because of an essentially faulty structure with which to manage its enterprise. Our conclusion is that the management structure is faulty in a number of respects. In particular, like so many nationalised industries, it is at the mercy of the prying fingers of Ministers, who choose to develop their policies whether or not they make commercial sense or are likely to increase the airline's efficiency. I do not have to recount how many aircraft British Airways has been required to buy because it suited the Government of the day. That is not the best way to maximise State assets.
If we can step back and put management decisions and the running of the business in the hands of those with the necessary management skills, commercial judgment and knowledge of the industry, the best days for British Airways lie ahead. I do not know whether those best days lie in one airline with one name or perhaps BEA and BOAC reconstituted. As a Member of Parliament I do not seek to advise those who understand such matters. I do not believe that British Airways has achieved the results that we might have hoped from the promise given when it was set up. I therefore oppose new clause 6 and commend the Government policy on British Airways.

Mr. Woolmer: The remarks of the hon. Member for Newbury (Mr. McNair-Wilson) ranged wide. He demonstrated with forthright honesty the attitude of many Conservative Members to the Bill. They see it as an act of denationalisation. The hon. Gentleman does not even regard a 51 per cent. ownership as fulfilling his expectations. The nub of the matter for many Conservative Members is whether British Airways remains publicly owned. The 51 per cent. Govern-

ment ownership is therefore important and should be properly considered.
The Secretary of State, in introducing the Bill, and the Under-Secretary of State on a number of occasions have emphasised that they do not intend to go below 51 per cent. at present. It is worth considering why the Government feel it necessary to emphasise that the Bill is not designed to meet the underlying objective of many Conservative Members. It would not be right for the Bill to go through unless the Government's intentions are made clear. It would be wrong to say that it was not intended to use the Bill for the final act of denationalisation if that were the real intention. The House should be told clearly the Government's intentions.
I was disturbed by the implication of the hon. Member for Newbury that all nationalised industries are automatically worse in many respects than privately owned industries. A glance at whole areas of nationalised industry will show that productivity, investment, seeking export markets and competing with imports are not the sole virtues of the private sector.
There are deep problems in privately owned and nationally owned enterprises. Whether or not share ownership slips past or stays below the magic 50 per cent. is not the make-or-break factor in productivity or what the hon. Gentleman calls entrepreneurial flair. The productivity record of many nationalised industries is better than that in many areas of private industry.
One of the areas of private industry that I know best is the textile trade, which, for various reasons, has an historically poor record of innovation, keeping up with market trends and investment. In latter years, faced with tremendous pressure, the industry has made great improvements which are much to its credit. The decline in the textile trade has not occurred because it is a nationalised industry, but if it had been a publicly owned industry all its woes would have been blamed on public ownership. We must not get tangled up in arguments that have no substance.
I found the arguments of the hon. Member for Newbury on accountability a little confused, but he seemed to suggest that nationalised industries were not as


accountable to their shareholders as are privately owned industries. However, he went on to refer to how Parliament was seeking to make nationalised industries accountable in a way that some private companies would find objectionable. Shareholders' meetings of most private companies are farcical. True accountability and oversight of the owners of private business does not take place at such meetings.
The hon. Member for Newbury was drawn into commenting on the present position of British Airways. I do not wish to comment in detail on the management of the airline. It is easy in the House to voice support for the management of a company or to voice caution and concern, but this is not the best place to explore the performance of managements, unless there are urgent reasons that force the House to do so.
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The airline business throughout the world is not in a happy state. The state of our economy and most of our industries is even more unhappy, with high interest rates, the high value of the pound, high inflation, and a depressed domestic market which brings with it depressed activity. It would be unfair to bandy across the Floor of the House arguments of principle on the Bill which do not depend on whether British Airways is going through a bad few weeks or few months. The Bill will stand or fall by different assessments of the best way to administer our airlines and individual businesses.
British Airways and many other airlines have been suffering problems in recent months. The flotation and sale of shares in the new company will be a success only if potential investors regard it as a profitable concern, not merely immediately but for a number of years. That position will have to be brought about before there can be a successful flotation or the sale of a substantial number of shares.
We have a mutual interest here. Whether British Airways stays completely nationally owned or a proportion of the shares are sold, the taxpayer and the private shareholder will wish British Airways to be a profitable concern. That is common ground.
On the assumption that the airline will be a profitable concern, it is important to ask why a substantial proportion of

shares should be sold. Over the years, the British taxpayer has footed the bill to make sure that British Airways remained our national flag airline. With that has come the present role of British Airways and the role that will, I suspect, remain the cornerstone of the airline's operations.
As the taxpayer has paid in good years and in bad, he should have the benefit of profits when the airline makes them. The Government appear to take the line that if a nationalised industry is making a profit it should be sold and if it is making a loss it is a target for being beaten around the head. Neither nationalised industries nor the taxpayer can win.
If a nationalised industry is making a profit that could bring a return to the taxpayer and help to keep down taxes, the Government will sell it. If it is making a loss so that the taxpayer has to foot the bill, the industry gets a public hammering. That is not satisfactory.
The Bill was introduced to the House as one example of the Government's willingness to denationalise—the word that eventually emerged was "privatise"—certain sectors of nationalised industry.

Mr. Michael McNair-Wilson: Would not the hon. Gentleman agree that British Airways not owned by the State and making a profit will pay a substantial amount to the State in taxation on their profit? But if it makes a loss the taxpayer will not suffer at all. Therefore, in effect, the taxpayer does rather better if the company is in the private sector than if it is in the State sector.

Mr. Woolmer: My point was that for the sale of shares to have any chance of success British Airways would have to be seen to be profitable and to have a clear promise of significant profits for some years ahead. In the present state of the airline industry and with, unfortunately, the possible impending state of the world economy, it would be a brave person who said tonight that a successful flotation was likely to take place for some time. I say that not as a debating point but as a reasonable assessment of a difficult market.
On the assumption that British Airways were turned round to profit, the question of losses or otherwise would not enter into the matter. If that were not


so, I do not believe that the institutions would be willing to consider buying shares.
Secondly, British Airways is not simply another company. The Minister has said a number of times that it will be a Companies Act company and that the Government will sell off shares in it. But British Airways is not just another company. It is the national flag airline. What do the Government think they will mean by the "national flag airline" in the future? The Under-Secretary said repeatedly in Committee that British Airways would remain the national flag airline. When he explained why it was desirable that the Government should retain at least 51 per cent. of the shares, he gave these two reasons:
First…it will be a good investment…Second…there is a token there of the Government's continuing interest and support for the national flag carrier…"[Official Report, Standing Committee B, 31 January 1980; c. 307]
carrier. If the latter is a reason for the Government's maintaining at least a 51 per cent. ownership for the foreseeable future, what do the Government mean by that phrase? Does it signify that British Airways are indeed something a bit extra, a bit special and deserving and calling for rather more public and Government support than there would be for a normal private airline?
The third reason why I think that the clauses should be accepted is that the position should be clear for the prospective shareholders. There are hon. Members who know more about these matters than I do, but it seems to me that if the Government of the day are considering selling off shares in a previously nationalised concern prospective private shareholders should know whether they will be faced with a continual dribble to the market of a proportion of the shares. That would have an effect upon the price they would be prepared to pay and on their feeling of security that the market would be supported and would not be undercut by the selling of another 10 or 15 per cent. of the shares. Moreover, they would want to know how firmly committed the Government were to the notion of British Airways as the flag airline. If the ownership came down to 20 per cent. or 30 per cent., that argument would begin to wane.
Private prospective shareholders should have some certainty as to the limits on the sale of Government shares. That is another argument in favour of supporting the clause. If it is not, I shall be grateful if the Minister or other Conservative Members will explain its weakness. If a major institution that owned 100 per cent., or even 70 or 80 per cent., of the shares of a company suddenly announced that it would sell off between 0 per cent. and 80 or 90 per cent. of its shareholding at some time in the future, possibly as quickly as it could, to raise cash for itself, that would have an unsettling effect on the market for the shares of that company.
I suspect also that the Government will have to provide some certainty to the market, that they will have to give an indication of what limit there will be on the timing of the selling of shares. I cannot believe that they will be able to tell the market "Buy 30 or 40 per cent. of the shares from us this year, and possibly in a few months' time we shall want to sell off another 20 or 30 per cent.".
Fourthly, I suspect that a secondary but important reason why the Government have in mind selling off shares has not been simply to denationalise them but to raise cash towards reducing the public sector borrowing requirement. Indeed, the sale featured in the ways in which the Chancellor of the Exchequer was to bring down that infamous thing called the PSBR. That is not the best reason, or even a good reason, for selling off an unlimited and unknown proportion of shares.
My fifth point is really a question to the Under-Secretary. Why do Ministers continually emphasise that they have in mind a lower limit than 51 per cent.? It was emphasised strongly on a number of occasions. Why was it emphasised so strongly if it does not matter? If it does not matter that the ownership is kept at no less than 51 per cent., why keep emphasising it? Why did the Secretary of State himself originally emphasise it, and why was it emphasised in Committee? If 51 per cent. does not matter, if it does not affect entrepreneurial drive, the board's commercial independence or the ability to adjust to market conditions, why object to the 51 per cent. being in the Bill? If the Minister objects to its being in the Bill, how does he explain his so far fairly


firm adherence to that figure as the limit below which he would not go?
The House has already been told that a number of other airlines have a majority Government shareholding. The Minister today found it helpful to look to the United States for other examples, but he knows quite well that if he turned to Europe he would find a whole number of airlines of major nations where the position was quite the opposite, where there was a substantial majority of Government or public sector shareholdings.
The Minister will know the facts and figures better than I do. What I have said is certainly true of Lufthansa and, I think, of Alitalia. It is no accident. It is because the European airline market is not the same as the American—in history, present structure or future opportunities.
The sixth point is the artificial distinction made at one time between the commercial manner of management and the proportion of shares owned by the public sector. The Minister asserted firmly in Standing Committee that it is not the Government's present intention to reduce the shareholding below 51 per cent. The reason for going even that far is to liberate the company into becoming a Companies Act company in order to exercise managerial independence and to be free from Government interference.
It is compatible, according to the Government's argument, to have 51 per cent. share ownership and the commercial freedom and independence of the Government that they wish to achieve. If the commercial independence of the board is not to be jeopardised by a 51 per cent. share ownership, I ask again what is the objection to keeping a 51 per cent. share ownership. I am at a loss to know. Apart from an ideological wish, in some sense, to get below 51 per cent., it appears to have no connection with profitability because profitability has to exist to sell 1 per cent. of the shares. It appears to have no connection with the managerial, commercial independence of the board because that appears fully to satisfy Ministers. The 51 per cent. is becoming rather a symbol in the same way as it was not possible to accept two non-executive directors.
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Conservative Members adopt such a fixed ideological position that they can-

not even consider things that appear sensible and rational in their own argument. The argument for two non-executive directors was lost. Now the Government argue that 51 per cent. share ownership is compatible with all their objectives except the ideological commitment that they will denationalise. To denationalise, they must eventually get below 51 per cent. That is a singularly unreasonable way in which to treat a company and to go about considering a balance between public and private interests. That is why the Labour Government, when we take power, after the Conservative Government have denationalised British Airways or any other body, will do just the opposite. We shall go to and fro, like a ping-pong ball, between nationalisation and denationalisation.

Mr. Colvin: On the question of to-ing and fro-ing, it has not emerged from the debate—I apologise if there was any mention of the matter during my absence from the Chamber—that there has been much play by the Opposition of the percentage of shares that the Government will retain in British Airways. At no time have the Opposition stated what would be their policy in regard to the shareholding in British Airways. Is it their intention, at some far distant future date when they may have the opportunity to do something about British Airways, to buy back enough shares from the market to make up 51 per cent.? Or do they go along with the expressed intention of the hon. Member for Nuneaton (Mr. Huckfield), who sits on the Opposition Front Bench, with regard to British Aerospace, when he says that it is Labour Party policy to take back from the owners of the shares any that are sold by the Government without paying compensation? Would that be the policy of the Opposition, if they ever achieved power again, regarding the shares sold by this Government to the private sector, including shares sold to employees in the industry on preferential terms? The hon. Gentleman may care to elucidate.

Mr. Woolmer: The hon. Gentleman will recall, if he was present during the Second Reading debate, the precise way in which my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) dealt with that point. The pity is that the Government, in introducing the novel


concept of a Companies Act company as a way of dealing with the relationship between public and private ownership, have lost the opportunity of trying to achieve an acceptable balance between the public and private sector. I am responding only to what I have heard in the debate and what appears to be the motivation of Conservative Members. It seems that their approach is to sell as big a proportion as possible to get the Government out of the situation. That seems a great pity in what could have been an interesting experiment in relation to public ownership and the private sector.
The notion of Companies Act companies and the public share of individual companies varying over time bears some consideration. One of the reasons for introducing some of the new clauses is to express concern about companies moving in and out of public ownership, as conventionally described in terms of 51 per cent. ownership, without any legislation or even endorsement by the House. Following the Bill, as hon. Members will appreciate, it will be open to any Government of the day, not only in respect of British Airways, to nationalise or denationalise without ever coming to the House. It would be done simply by buying or selling a proportion of the shares. One of the reasons for these new clauses is to make sure that the House considers it right that companies should be brought into or pass out of ultimately the ownership of the public sector, conventionally defined as 51 per cent.
I hope that the argument for the new clauses will not only be answered constructively but pondered upon by the Government. I hope that the Government will accept that the House should properly consider whether and why any particular company should be denationalised and whether the 51 per cent. ownership is a bar to commercial independence and judgment, which Ministers, I understand, accept is not the case.

Mr. Bill Walker: I shall be brief. I am opposed to new clause 6. According to my reading, it means that we shall be writing into a statute something that would require another statute to be changed. The whole idea of selling these shares to the public, however it is done, is that the best possible price should be

obtained at the best possible time. I do not know when that time will be. I do not know what is likely to be the best possible price. Circumstances change and market conditions change. I believe that competition—this is true in the buying and selling of shares as with anything else—forces companies to become more aggressive in their marketing and more competitive in their pricing policies.
A splendid example is the achievement of Laker Airways on the North Atlantic route. People like myself can now take their families on holiday to North America. That could not have been contemplated a few years ago. It was out of the question because of the cost. We are looking to see whether the consumer interest is being served by competition. I remind hon. Members that there are consumers who buy shares. They are looking to get into things where they expect that there will be profits in the future and where they will get a return for their investment.
One reason why there should be a degree of flexibility is that this will affect the pricing and the marketing of the shares. If we write into a statute things that are inflexible, this is bound to be reflected in the value of the shares.
I remind Opposition Members that the Minister made it clear in Committee that the Government were thinking of between nil and 49 per cent. Those were the shares that the Government were considering selling off. The hon. Member for Batley and Morley (Mr. Woolmer) said that he felt the situation could become like a game of ping-pong. To write in this clause would not change the ping-pong ball aspect. Some people would still feel that retaining 51 per cent. provided the opportunity to renationalise. They would see it as the springboard to renationalisation. So the ping-pong ball effect is still there. In my judgment, if it it written into the statute it could affect the value of the shares as they were marketed. That would not be in the best interests of the British taxpayer and the consumer. In my view, that is a very good reason why the clause should be opposed.

Mr. Tebbit: Again I have to say that I do not think that we have explored any ground which is new to that which we


explored in Committee. That is not surprising, and I say it in no criticism of those hon. Members who have contributed to the debate.
The hon. Member for Hackney, Central (Mr. Davis) was very anxious to know what were the factors which would cause the Government to reduce their shareholding from the level which was reached immediately after the initial launch or, indeed, below 50 per cent. In reply to the hon. Gentleman, I put forward two suggestions.
First, the company might choose to make a rights issue and the Government might choose not to take up 51 per cent. of that rights issue. If we put in a requirement that the Government's holding should be maintained at 51 per cent., and if 51 per cent. was reached on the first launch, we would be writing into the statute a requirement that every time British Airways made a further issue of capital the Government would have to take up at least 51 per cent. of it. It would be unwise of us to bind our successors in that manner. The Government of the day might think that it was a good investment. They might think that it was a bad investment. They might think that they would prefer to do other things with the money than be forced by statute to spend it on acquiring further shares in the company. That is a clear and cogent reason why we should not write in such a requirement. That is how it might come about that the Government's shareholding fell below 51 per cent.—even without any decision taken by the Secretary of State of the day deliberately to sell the shares for any other reason.
Secondly, I am not sure that I know fully the considerations which moved the Labour Government to dilute their holding in British Petroleum without, I might mention, any form of parliamentary approval by more than one-third, or about 25 per cent. if we include the Burmah Oil shares held by the Bank of England. At no time did right hon. and hon. Gentlemen then in Government and now in Opposition feel it necessary to come to the House to seek statutory approval of their plan to sell a very substantial holding of BP shares. I remind the House of how substantial it was, because some hon. Members may have forgotten and others may wish to forget.
At that time the BP company had a nominal capital issued of £386½ million, of which £186 million was held by the Government, with a further £78 million represented by the Burmah Oil shares held by the Bank of England—a total of £264 million of Government investment. They sold £66½ million of that investment—about one-third of that which was indisputably theirs, as opposed to the Burmah shares—without seeking statutory approval. Yet, when it comes to discussing what might happen to British Airways shares, suddenly right hon. and hon. Gentlemen find that there is a requirement for parliamentary approval.
7.45 pm.
Why? What is the difference? The Labour Government left themselves only £119¼ million of undisputed shares—exeluding the Burmah shares—in their ownership out of £386½ million issued. This makes their protestations about a 51 per cent. limit and the need for parliamentary approval look pretty thin and shabby. As so often happens, they want us to follow procedures which in their time they found were not proper or suitable for the Government to follow.
The hon. Member for Huddersfield, East (Mr. Sheerman) tried to find common ground with the rest of us on a number of issues. Where I can find common ground with the Opposition, I do. I admit freely that it was the arguments put forward by the Opposition around this matter which convinced me of the desirability of providing that the Secretary of State could buy back shares if he wished to regain the level reached at the launch stage if, after that initial launch, the Government's holding was reduced below the figure which was then reached.
That is another difference between this Bill and the British Aerospace Bill, and I am unashamed to mention it. I do not think that it matters that there are differences between the two and that in this respect it is considerably more advantageous, if that is the word, to the views of the Opposition than the British Aerospace Bill. I am unashamed about it. What does it matter that in dealing with different industries in a different context we come to different conclusions?
As I say, I try to find common ground where I can. However, I assure the hon.


Member for Huddersfield, East that I shall not experience any sudden conversion on the road to Damascus. As a matter of interest, I happen to have driven along that road more often than I care to remember. I can assure the hon. Gentleman that if he drives over the hills from Beirut to Damascus, as one used to be able to do, with a local taxi driver, he may come close to conversion. However, it is conversion to a very religious view, because one feels very near to death at times. I am not likely to experience any other form of conversion, however.
The hon. Member talked about speculators and sharp operators who would come in and buy shares in British Airways. Obviously he regards them as despicable people. However, they are precisely the same speculators and sharp operators who bought an investment in British Caledonian. Recently British Caledonian seems to have been one of the pet creatures of the Opposition. Right hon. and hon. Members are very concerned about the fate of the speculators and sharp operators who bought shares in British Caledonian. They use no pejorative expressions about them. I do not believe that we can take the hon. Member for Huddersfield, East very seriously.
My hon. Friend the Member for Newbury (Mr. McNair-Wilson) was right to point out that BA has a record of which there is a great deal to be proud. It even had the proud privilege at one time of having me as one of its employers. However, its record might have been better had it not suffered from Government interference from time to time. I might add that it would have been better if it had had to compete for its capital investment with other commercial enterprises in the private sector rather than with other Government expenditure totally unrelated to commercial purposes.
The hon. Member for Batley and Morley (Mr. Woolmer) asked one or two questions, and I shall answer them as best I can. He asked what a flag carrier was. It is an expression now which has no concise meaning in the way that it used to. I should define British Caledonian as one of Britain's flag carriers. Similarly, I should describe Pan American, TWA, Delta and many others as American flag

carriers. There is no doubt that British Airways will be the prime British flag carrier, merely because of its size and capability, for as far ahead as I can see in the future.
The hon. Gentleman asked about the private investor who would want to know about the Government's intentions in respect of the final amount of capital in British Airways to be disposed of. The private investor must make up his own mind about these things. If that was the worst of the hon. Gentleman's worries, as opposed to worrying about the Government's intentions he should be worrying about some of the sillier things by people like the hon. Member for Nuneaton (Mr. Huckfield) and the Member for Bristol wherever it is, the odd ball one.
We have been asked why we should sell. There is always the desirability of raising cash. Let me assure hon. Members that the effect of the cash that would come from the sale of shares is relatively small compared with the effect on the PSBR of no longer having a Government guarantee on future loans for capital investment.
I have dealt to some extent with the question of the 51 per cent. shareholding already by pointing out that we do not necessarily wish to bind ourselves to take up 51 per cent. of every rights issue. As for ping-pong and the way in which industries may be nationalised or denationalised, there are several ways of getting around that. One is to make sure that we do not have another Labour Government. That will resolve the situation in the best possible way. The second way, since I wish to see common ground, is the method I have already mentioned of allowing a future Secretary of State, if he wishes, to purchase back shares without any need of further legislation or any need to change the structure of British Airways Limited. He would have the right, if he wished to avail himself of it, to appoint some or all of the directors.
That makes the position plain. The only thing I would add is that there still seems to be a misunderstanding among Opposition Members in the way they refer to the Government retaining majority control in the initial stages after the launch. I must say that even if the Government maintain the majority of the


shares that does not mean that they seek to maintain control of the airline.
I do not think that I can help the House further except to say that I find, on the grounds I have given, that all three new clause are unacceptable, each for slightly different reasons.

Mr. Woolmer: I should like to ask, briefly, in view of the Minister's concluding remarks, what he meant by his statement at column 306 of the Official Report for 31 January when he said:
What I have said is that we intend to maintain a controlling interest.

Mr. Tebbit: I was then speaking of the short to medium term. I also said:
The point I am seeking to make is that we wish to maintain a position of flexibility in these areas.
Earlier I had said:
we are not committed to selling any particular percentage. What I have said is that we intend to maintain a controlling interest.
The hon. Member for Batley and Morley (Mr. Woolmer) interrupted me at that point, and I said:
That to some extent would frustrate the exercise in which we are engaged."—[Official Report, Standing Committee B, 31 January 1980; c. 306.]
The point I am seeking to make is that we wish to maintain a position of flexibility. At column 956 of the Official Report and in other places, I made it plain that we did not bind ourselves in the long term to maintain that position, not least because of the consideration that it would force us always to take up the majority of shares which were issued in a rights issue. For those reasons, I ask the House to reject all three new clauses.

Question put and negatived.

New Clause 7

NOMINATION OF SUCCESSOR COMPANY

The Secretary of State shall not nominate for the purposes of this Act a successor company unless the memorandum and articles of association of that company shall have been

The Secretary of State shall not nominate Parliament—[Mr. Clinton Davis.]

Brought up, and read the First time.

Mr. Clinton Davis: I beg to move, That the clause be read a Second time.
I do not propose to take very long in moving this clause, but we feel that the way in which the Government have gone

about the Bill represents what I was going to call a constitutional outrage. However, if I were to use such language I know that the hon. Gentleman would feel that I was introducing an unnecessary note of controversy. We feel that it is a questionable way of going about the business when the Government have declared that they will—at least in the foreseeable future—take the majority of the shares.
That being the case, the Minister has said, rightly, that this is a new design. It has not been tried before and we feel in that case that the memorandum and articles of association which govern the constitution of this company should, initially at least, be subject to parliamentary surveillance. The taxpayer will have a continuing interest in this company for some years ahead. While it is true that the memorandum and articles can be changed only by a special resolution of the company, which would require a 75 per cent. majority, if the Government are indefinite about the way in which they go about their duties and about their task of dealing and mobilising their shareholding, there is a real risk, as we see it, that they will decide not to intervene if the memorandum and articles were to be changed.
I should like to know from the Minister what undertakings he is prepared to give about the possibility of altering the memorandum and articles when those alterations are material. The Minister has been kind enough to let us have a copy of the draft memorandum and articles of association. He laid great stress on what he called the transparency provisions in what I concede are very well drafted memorandum and articles.
To some extent they deal with some of the anxieties that we expressed about foreign ownership. I am not convinced that they prescribe a sufficient way of dealing with the possibility of undesirable foreign ownership. The Minister has gone a long way to meet us on this. I concede that. The trouble is that if it were decided by some of the shareholders to seek an alteration in the memorandum and articles of association and the Government were to remain inert in the face of that challenge as far as this issue is concerned, I think that the Minister would concede that that would represent a thoroughly undesirable state of affairs.
What I am inviting the Minister to say is that, if the situation arose, the Government would not hesitate to mobilise their power in order to protect the best interests of this country as far as its national flag carrier was concerned. That does not wholly dissolve my anxieties, because the fact remains that it is possible for the memorandum and articles of association that we have seen to be changed before the successor company is nominated.
I seek another undertaking from the Minister that as far as the transparency provisions are concerned there will be no change. I seek an undertaking that there will be no fundamental change in the document that has been put before us and which I am inviting the House to look at, though we may not debate its detailed provisions. That is quite absurd, though I mean no reflection upon you, Mr. Deputy Speaker. It is a strange state of affairs that when we embark on this novel enterprise we are not permitted to debate the memorandum and articles of association except in general terms.
Parliament should exercise a more positive role. For that reason, we have tabled the new clause. I suspect that the Minister will respond positively to the invitation. That will avoid a vote on the issue. In Committee the Minister gave some indication of how he felt. However, he must place on record precisely how the Government will respond when faced with the proposition that I have described. We must know whether the substance of the draft memorandum and articles of association will prevail.

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Mr. Neubert: I shall speak on the new clause because of my interest in the articles of association and the character of the company which is to be created by the Bill. Complete denationalisation is not involved. A company will be created which will be part public and part private, although that definition might be too simple and be challenged. Under the articles of association is it intended to exclude any activities, or is the new company to be one of which there are many, engaged in speculative activity the articles of which allow any activity, bt it beekeeping, roof thatching or sheep shearing?
I hope that the Minister will not think that I am gunning for him alone, because a point of principle is involved in connection with other Government policies. For example, British Rail proposes to invite private participation in some of its subsidiary activities. To judge from Sir William Barlow's statement, the Post Office is planning to set itself up in opposition to retail travel agencies by using Post Office branches for the sale of travel services.
I hope that the Minister will forgive me for raising this matter for a second time this evening. He replied in an earlier debate, but I should like to pursue some matters which are related to the new clause. The Minister said that the financial support which I claim will be given through the character of the company to its private activities will not be provided by the public purse. He chose to interpret that as meaning that in future the company's activities will have to look to private sources for future funding. I presume that that is written into the articles. However, the British taxpayer has created the assets of the company which is to be sold in part. The justification for creating the company is that an airline of such magnitude must have a monopoly. After all, a Conservative Government nationalised Imperial Airways and created the national airline. It became the flag carrier and needed public support on a par with other national airlines.
Another argument is that the airline will provide services to low-traffic, provincial destinations to give a regional social service rather than a commercial enterprise operating at a profit, as it will under the new constitution which I hope will come before Parliament for approval. It is significant that one of the first acts of British Airways after the Bill was introduced was to announce that it intended to abandon its less profitable provincial routes, thereby knocking away one of the justifications for its monopoly.
The Minister says that from the enactment of the Bill the new company under its new articles will in all respects, in relation to monopolies legislation, be the same as other airlines. He cited Laker and British Caledonian as illustrations. The new company will be substantially larger than either of those two airlines. I have only to cite the proportion of


domestic operation which British Airways has to make that point. The Government are launching a monopoly on the market. For that reason, it is necessary to restrict its activities and not to allow the wide-ranging possibilities, either under the articles introduced at the outset or as amended later.
I am not sure about the United States. My impression is that there are restrictions on airlines, if not as to hotel keeping at least about engaging in retail travel and tour operating. I thank the Minister for his offer to write to me about that.
The new company will not be controlled effectively by monopolies legislation. It is inconceivable that a company with a 51 per cent. or more shareholding by the Government should be investigated. That is like asking us to believe that Buckingham Palace would be investigated for having a monopoly of royalty. An investigation is unlikely. My reasons are exemplified by the latest decision on the Hong Kong licence.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Member is aware that we are dealing with new clause No. 7 which deals with the parliamentary control of the memorandum and articles.

Mr. Neubert: I am aware of that. I was seeking to advance reasons why the memorandum and articles of association should come before Parliament because of the monopoly domination of the market by British Airways Limited when it is constituted. I am almost at the end of my remarks, and I hope that I shall not incur your displeasure in the next few minutes, Mr. Deputy Speaker.
As a result of a decision to open up competition to four airlines, the present company has come forward with a fare of £99 to Hong Kong. That is substantially less than the fare suggested by Laker Airways which the Minister used as an example. Is that because British Airways—or the newly constituted company—is more efficient because it gives a more attentive service, because it has the lowest number of staff per air miles flown or because it can get a cheaper price for aviation fuel? It is not. It is because of its domination in the market. I hope that the articles of association will be subject to parliamentary approval. I

hope that they will not be open to amendment without Parliament having control.
British Airways is running into declining profitability. The ultimate test for the Government is whether they are prepared to see British Airways go bankrupt. All the talk of articles of association and about its being a private sector company like any other is not reality. An effective public monopoly will remain.

Mr. Tebbit: I find it hard to relate what my hon. Friend said on the claim that an effective public monopoly will remain, given what has just happened on the Hong Kong routes hearing where an effective public monopoly—that of British Airways—has been effectively broken.
In referring to the domestic routes and the possibility of cross subsidy between the various activities of British Airways Limited, it must be accepted that the Civil Aviation Authority has a duty to ensure that the operators of those domestic routes do not take money from those profits to operate other activities. If they did so it would be fairly clear that other efficient operators could operate those routes at a lower fare or could offer a better service.
My hon. Friend must accept, therefore, that if this company is to be launched—and we concluded on Second Reading and in Committee that it should be—it must be launched as a private sector company. It would be totally incompatible with the whole thrust of the legislation for us to ask Parliament to assume responsibility for approving the memorandum and articles of association of the company. This is not the place for the articles of association of a company to be debated and possibly to be amended. Least of all does that apply when the Government may not at some time have a majority shareholding in that company and when the Government have quite clearly said that they will not seek to manage the company.
The objects of the company are set out in the memorandum, a draft of which is in the Library. It is perfectly open to the company to seek to amend those articles in the future. It would do so as would any other company, but since it is primarily in the airline business, and since that is what the investors will put their money into, it would be extraordinary if


it deviated into unrelated activities or if it chose to throw away shareholders' profits so that it lost money in other areas. I do not think that my hon. Friend has voiced a reasonable fear.
The hon. Member for Hackney, Central raised a point to which I can respond to some extent. I have made it plain that the Government would be willing at any time to marshal their shareholding against any moves which were clearly against the interests of the company. That undertaking has been given and it remains.
The hon. Member asked also for an undertaking that the final article of the company would be in accordance with the draft that has been placed in the Library. The best assurance I can give is that the thrust and purpose of the final articles will be in accord with the draft. We would not seek to deviate from that draft in any material form.

Question put and negatived.

Orders of the Day — ROYAL ASSENT

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I have to notify the the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:
1. Port of London (Financial Assistance) Act 1980.
2. Licensed Premises (Exclusion of Certain Persons) Act 1980.
3. Industry Act 1980.
4. Transport Act 1980.
5. Sea Fish Industry Act 1980.
6. New Towns Act 1980.
7. Gas Act 1980.
8. British Railways (Castlefield) Act 1980.
9. Bangor Market Act 1980.
10. Wesley's Chapel, City Road, Act 1980.
And to the following Measure, passed under the provisions of the Church of England Assembly (Powers) Act 1919:
Diocese in Europe Measure 1980.

Orders of the Day — CIVIL AVIATION BILL

As amended (in the Standing Committee), again considered.

Clause 2

VESTING OF PROPERTY, ETC., OF BRITISH AIRWAYS BOARD IN A COMPANY NOMINATED BY THE SECRETARY OF STATE

Mr. Tebbit: I beg to move amendment No. 1, in page 2, line 19, after first "section" insert
and section 4(1) of this Act".

Mr. Deputy Speaker: With this we may also take Government amendments Nos. 8 to 10.

Mr. Tebbit: I do not think that this group of amendments needs to detain the House for too long. The amendments are of a technical nature. They involve no change of policy. The amendment to clause 3, line 33 is designed to cater for the particular procedure for the issue of shares to and the sale by the Government. The other amendments are purely consequential to it.
If the House would like me to explain the details of the workings of renounceable letters of allotment I should be happy to do so, but I feel that that is not necessarily the wish of the House.

Amendment agreed to.

Mr. Clinton Davis: I beg to move amendment No. 5, in page 2, line 29, leave out "thing" and insert "act".
This is a matter of great significance. It arises from the inelegance of the drafting of subsection (3)—
Any agreement made, transaction effected or other thing done by
The Minister should have done better between Committee stage and Report. From having consulted the Oxford English Dictionary, my understanding is that "thing" in an obsolete legal term. Perhaps it is right that in that context it should be included in the Bill. I also understand, having further consulted the same dictionary, that Plato said
Theft is a mean and robbery a shameless thing.

That is another very good reason for having used the word.
This is a most undignified way of drafting legislation. I should have thought that the Minister would seize the opportunity, particularly since in the past he complained about the inelegance and falsity of the language and the way in which statutes are drafted, to make some advance here. So perhaps he will tell us that between now and consideration of the matter by their Lordships something will happen to change drastically the feeble language of the statute. Of course, it is a feeble piece of legislation, but even so I think that the Under-Secretary could do better.

Mr. Tebbit: I recollect that in Committee I agreed to consider an alternative—
a more elegant phrase which would keep the draftsmen and lawyers happy".—[Official Report, Standing Committee B, 31 January 1980; c. 257.]
I seized the opportunity, but then I dropped it because I could find no phrase that would keep the lawyers and draftsmen happy. Unfortunately the word "act" does not represent any improvement over "thing". It could be construed in a narrower sense, and so, as much as I wanted to be helpful, I could not accept the amendment.
To be perfectly serious about the matter, I should explain that a breach of duty by the board giving rise to a liability, or a breach of contract by a person obligated to the board may arise through a failure to act. The word "act" would not cover such a case whereas "thing" would.
We have not been idle on the matter, but we have been unable to improve on the word "thing" which brings across the meaning we require—

Mr. Clinton Davis: Has it been to Cabinet?

Mr. Tebbit: I must confess that it has not been to Cabinet. The Cabinet seems to have had other matters on its mind in recent times.
Although we criticise lawyers for using abstruse and difficult language, in this case we can find nothing more simple and ordinary than the good old Anglo Saxon word "thing"—before anyone thinks of anything else.
In the circumstances, I hope that the Opposition will not press the amendment. If any of their Lordships, with all the erudition for which they are famous, could find a better word I should still be willing for the matter to be considered in another place.

Mr. Clinton Davis: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. John Smith: I beg to move amendment No. 6, in page 2, line 31, after 'day', insert:
'(including without prejudice to the generality of the foregoing, any obligation founded on legislation which is specifically repealed by this Act)'.

Mr. Deputy Speaker: With this we may also take the following amendments:

No. 7, in page 2, line 31, after 'day', insert:
'including, without prejudice to the generality of the foregoing, any pension right or contract of employment.'

No. 54, in schedule 3, page 25, line 14, column 3, leave out 'section 15'.

Mr. Smith: These amendments give us an opportunity to raise the question of pensions of employees of British Airways as it is presently constituted. We discussed the matter in Committee. The Under-Secretary will recollect that Opposition Members expressed concern about what will happen to the agreements made between British Airways as presently constituted and the relevant trade unions and professional associations about pensions.
It is fair to say that a good pension arrangement exists—of which the Under-Secretary is a beneficiary—for employees and former employees of British Airways. The change from a public corporation to a private sector company raises the question of what will be said when the shares are launched about the obligations of the company towards its employees, and the likely effect upon employees of such a change. If the change had not been proposed, they would know where they stand. As I understand the position, the pensions are index-linked. They are much the same as the pensions paid to employees in the public service.
We pressed the Under-Secretary about this matter in Committee because it is a matter of legitimate concern for the many employees of British Airways. Their pensions are a material part of their wages and conditions of service. The Under-Secretary said that pensions would be a matter for the new board of the successor company. He could not say what would be the attitude of the board towards the obligations that it inherited.
One reason why we tabled the amendment in this part of the Bill is that in this part of the Bill a legal technique has been used to change the nature of the corporation, providing that all previous obligations of British Airways will become the obligations of the new company. Just as the new company will have the right to the benefit of all the contracts and the advantages of British Airways, it will be subject to all their liabilities and obligations. It will be in the same legal position on rights and obligations, and we feel that the pension obligations should be included in that. The pension obligation of British Airways should be transferred lock, stock and barrel to the new company. It is not unreasonable to say that if the legal ownership of a company changes, especially when supervised by a Government who give similar pensions to their employees in the public sector—I remind the House that index-linking was introduced by a Conservative Government in 1971—it is unusual for them to put at risk the pensions of employees of a public corporation.
The problem could be solved easily if the Government said "We shall guarantee that, whatever happens, your pension rights will be secured". That is one of the things that any intelligent person acquiring a company in the private sector should wish to do. I know that, regrettably, that does not always happen. Surely what we expect of someone acquiring a company is that that person should say to the employees "I shall guarantee the same conditions of employment as you have at present, especially your pensions. I assure you that you will be no worse off. You may be no better off, but you will not be worse off under my control". It is an analogous position. Where the Government superintend the handover of the assets to the new creature, the successor company, it is entirely legitimate for the employees of British Airways—some


of whom have spent a long time in their service in the expectation that they would have certain pension rights at the end of that service—to say that that was a factor that they took into account when deciding either to join British Airways or to remain in their previous employment.
We are entitled to ask the question that I know trade unions and professional associations have been asking about the matter. If they were not asking questions, they would not be carrying out their proper obligations to their members. I hope that tonight the Under-Secretary will deal with the matter as clearly as it should be dealt with. He should say that the Government will take steps to ensure that the pension rights will be in no way diminished or affected adversely by the Bill's proposals. When we tackled him in Committee we received a bland, turn-away answer. He said "Do not bother me about this because it is a matter for the successor company, and who am I to know what will be its position?"
However, investors will want to know the Government's attitude when they announce the prospectus. There is a considerable obligation towards the company's employees to maintain pensions on an index-linked basis. It is not common practice throughout the industry but, by and large, it is common practice throughout the public sector. In those circumstances the House would be failing in its duty if it let the legislation reach the statute book without a better answer to this highly pertinent and important point than that which we have so far been able to extract from the Under-Secretary in Committee. We touched on the matter in Committee, and it is proper to raise it again on Report because it is a matter with which the whole House should be concerned. It is almost a matter of honour in the way in which we deal with employees of companies.
If political parties are elected to power, and carry out changes—I am not saying that everybody should be protected from those changes, as that would be impossible in the modern world—the Government should set an example to other employers in elementary matters such as conditions of employment. Many employers take the trouble to reassure their employees when they are faced with a take-over. Some, unfortunately, do not

do that. It is a compelling argument from the point of view of employees.
The other matter that relates to this group of amendments deals with the repeal of section 15 of the Civil Aviation Act 1949, which relates to comparability being introduced into wage negotiations for British Airways employees. I am not sure why the Government wish to make that change, or why they are so averse to this provision, which has been on the statute book for about 31 years. I wonder why it was swept in among the repeal provisions in the Bill. It is an important point, because I know that the trade unions thought it a valuable and important piece of statutory assistance in the pursuit of better wages and conditions for their members in the airline industry.
My first point about pensions is important. I ask all hon. Members to give careful consideration to the matter, especially as the Government have other pieces of legislation of this character. If the pension rights that employees are entitled to expect to be preserved are put at risk by the political activities of the Government, it is a matter that should be thrashed out in this place where we have the responsibility of deciding whether the Government should be permitted to change the law. The matter should engage the attention of all hon. Members in all quarters of the House. I put it forward not in any partisan spirit but because I am genuinely worried about the effects of the provision. I hope that the Under-Secretary will be able to reassure us better than he has done so far.

Mr. Tebbit: I am perhaps mildly hurt that the right hon. Gentleman should feel that I did not give sufficient assurance in Committee. I thought that I went as far as I could about this matter. Amendment No. 6 would be undersirable in several ways, for technical reasons with which I need not bother the House, because the right hon. Gentleman and I have never tried to base our arguments on technical points. I accept what he said in the spirit of his argument rather than in the detail of the amendments as drafted.
The right hon. Gentleman will find, at columns 259 and 260 of the Official Report of the Standing Committee, the points which I have to make again this evening, although I might use slightly different words on this occasion, since


it would seem to be rather boring to read from the Official Report what I said on that occasion.
As I explained to the Committee, the successor company, both before or after any flotation of the shares, is to have precisely the same relationship with the airways pension scheme as the present board does, and the company will be subject to the same rules.
I am advised—indeed, I know perfectly well because I am a member of the pension scheme, as the right hon. Gentleman has mentioned—that there are safeguards within the scheme which would effectively prevent a worsening of the terms of benefit under the scheme. As I told the Committee, there is a 50–50 arrangement for representation on the board which manages the scheme. So, clearly, there will be some reference to the pension scheme in the prospectus for the sale of the shares, because it is an important factor to be taken into consideration by those who choose to invest in the airline.
We have to take into account the common base self-interest of the company. For a company which has inherited under the Bill all the obligations of its predecessor corporation—and they include all the obligations in the pension scheme—to try to change those or to evade them would hardly be a way in which to run a company successfully and profitably. It would cause grave difficulties.

8.30 p.m.

Mr. John Smith: I take the point that one might expect the company to behave decently for all sorts of reasons of self-interest, as well as for reasons of principle, which is the point that the Under-Secretary is making. But surely we could put the matter beyond doubt—in circumstances in which the Government will, at least for the reasonably foreseeable future, be the majority shareholder—by the Minister saying that he will take steps, using the Government's majority shareholding position, to give an assurance that the new pension scheme will not put people in a worse position than they are in at the moment. That is not a great deal to ask and it is within the Government's power.

Mr. Tebbit: Mr. Tebbitrose—

Mr. Blackburn: Will the hon. Gentleman give way?

Mr. Tebbitt: Certainly.

Mr. Blackburn: My hon. Friend will be well aware that I raised this point in Committee. I feel very strongly about it. I pointed out that
at 31 March 1979 the assets of the pension fund stood at £500 million".—[Official Report, Standing Committee B, 31 January 1980; c. 265.]
That was a bold statement of fact. I qualified it by saying that it did not mean a thing whether it was £500 million or £750 million, and that we were trying to determine whether the pension fund was in a sound and viable state.
It hinges, I suggest, on the earlier question in regard to clause 2, when we spent time discussing when the shares will be put on the market and at what price.
Before we reach that stage, we want to know what liabilities the new company will inherit. It may well be—as we tragically found in the matter of the Post Office—that the pension scheme is grossly under-funded. I hope that my hon. Friend will be able to help the House in this matter, because there is common ground on each side. Although we have had a debate in the desert of democracy, we have now reached the oasis of civilisation, because we are talking about men's pensionable rights, which we all want to safeguard.

Mr. Tebbit: I entirely accept my hon. Friend's point. At a later stage in Committee I referred to the progress that was due to be made in the review of the trustees to ensure that the assets were adequate, because they are under a statutory obligation to make sure that the fund is able to cope with its obligations.
Nothing in this world is absolutely certain, except death, and to say that a pension fund is soundly based is to say that it is soundly based so far as one can see; but in the event of war, in the event of absolutely disastrous economic circumstances, or a number of things of that sort, no pension fund can stand up. A pension fund which may well have seemed adequate to people in Germany just after the First World War would have looked very odd after the economic problems which hit that country.
There is no possibility of giving absolute guarantees. What I can give is an undertaking that there is nothing in this legislation which of itself affects the relationship between the corporation or its successor company, on the one hand, and the pension scheme, on the other hand. Any future changes in that pension scheme would be a matter between the employees and the company, as indeed at present any changes are a matter between the employees and the corporation—or, to be more accurate, the trustees of the fund, I think, because they represent also the existing pensioners as well as the employees. So nothing in that sense changes unless the parties conclude that it should change.
There are the two problems which I have outlined: first, the obvious implications, on the one hand, for industrial relations and other matters, and, on the other hand, the "no worsening" clause and the 50:50 representation on the trustees committee. I think that that is the best guarantee that one can give.
The Goverment's position as a shareholder will have to be maintained as I have outlined it—that the shareholding would not be used to interfere in the management of the company except in circumstances in which it was clear that something which was being done or was proposed to be done was gravely against the interest of the company. When I say "the company", one has to accept that the company includes the whole of the business, and if something was being done which would disrupt that business, clearly the Government's shareholding might be called upon. But I do not believe that I can go further than that in that respect. I hope that the right hon. Gentleman will feel that that is a reasonable position.
From an entirely personal point of view, as one of the beneficiaries of the fund, I am satisfied that it is a reasonable position to take. I have had no representation from the trustees of the fund to the contrary. I think that that is significant, because I am sure that they are aware of these matters and have had our debates drawn to their attention.

Mr. Sheerman: Have there been any representations from the trade unions whose members are employed in British Airways about the pension fund? Will

the Minister confirm that it is the Government's priority that this should be a company which pursues profitability first and the welfare of its employees second?

Mr. Tebbit: The welfare of employees cannot be divorced from the profitability of a company. An unprofitable company cannot care for the welfare of its employees. It does not have any money to do so. We have learnt all too often that it is all very well to have mouth about the welfare of employees, but unless that mouth is backed by a wallet which is filled from profits the words are worth absolutely nothing.
I have to say, as I said in Committee, that I have made it perfectly obvious to the trade unions that I am willing to discuss with them any matter which they wished to discuss with me about the Bill, and that the door of my office, as I have said on many occasions, was open. I still await a substantive reply to a certain letter which I wrote to one leading trade union leader on these matters, generally speaking. The answer is that I have received no representations. I regret that I have not received representations from the trade unions about the Bill, because I might have been able to assist them in understanding its purpose and the way in which it was constructed.

Mr. John Smith: I think that I can summarise succinctly the Minister's response to the concern expressed in this debate. He said that there is nothing in this change which will positively harm the pension scheme and nothing in the Bill which can be said to depress rights in any way. That is true; there is not. The hon. Gentleman says also that he cannot guarantee people's pensions for ever. That is right; everyone accepts that British Airways cannot guarantee pensions any more than a successor company can.
However, the crucial point is that people should be no worse off as a result of the change in the ownership of the company. The Minister referred to the trustees of the pension fund—50 per cent. from the staff side, I understand, and 50 per cent. from the management side, which is a common arrangement in these matters. But the 50 per cent. on the management side might be following different instructions from the board of the successor company to the instructions at present emanating from British Airways. It is


because we seek to prevent any change of policy from that quarter that we seek these assurances.
It does not seem much to ask that the Government should say that, one way or another, they will ensure that people are no worse off. I do not believe that there is any difficulty in the Government ensuring that their views are carried out. If a Minister said that it would be wrong for the successor company in any way to change the policy towards the pension fund, that would carry great weight with the successor company.
I hope that the Minister will ponder the matter. The Secretary of State is listening to the debate; I hope that he will consider this matter as well. The Government will, after all, remain, at least for a period while this matter is discussed, the 51 per cent. shareholder and they will have effective power. I am not asking the hon. Gentleman to commit other people to doing what he wants to do. The Government will be the beneficial owner for legal purposes of the successor company for that material period. I am asking for nothing that is unreasonable.
The Minister says that the amendments are technically deficient, so I shall not press them to a Division, but it would be well for hon. Members to consider the issues raised. I hope that the Minister will undertake to consider the arguments which have been advanced, as well as, if that is desired, any further representations from employees.
I understand that it may be a little while before the Bill is considered in the other place. Perhaps, between now and then, the Government can reconsider the matter. I am not asking them to give spot commitments now, but if the Minister will look at the matter again, he will go some way to assuaging the genuine concern which is felt.

Mr. Tebbit: Perhaps we can count that as an intervention in my speech, so that I can continue without asking the leave of the House to speak again. I am grateful to the right hon. Gentleman for the way in which he has put the matter. I am under an obligation to respond in a like manner.
Of course I am willing to look again at the matter to see whether I can give

any more positive assurance. In the circumstances, that is probably not possible, but I shall certainly look at the matter again. If representations are made to me, I shall listen to them with care. If it were possible for anything more to be said in another place, I should certainly want that to be done.
The other matter involved in these amendments is the repeal of section 15 of the Civil Aviation Act 1949, which provided that terms and conditions of employment on any independent air transport undertaking should not be less favourable than those of the British Airways Board. That has been honoured, some times, more in the breach than in the observance, with the knowledge of the unions concerned, which have seen some of the difficulties that the independent companies went through from time to time and have been co-operative in seeing that those companies survived.
When British Airways becomes a Companies Act private sector company, it would not be appropriate if the wages and conditions of other companies were set by reference to it. That is not the way in which we conduct business in most other sectors of industry—that by negotiating with one company the wages and conditions are set for all the others. While we are making this change, therefore, it is appropriate to repeal section 15.

Mr. John Smith: In view of the Minister's undertaking to reconsider the major point, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3

INITIAL GOVERNMENT SHAREHOLDING IN THE SUCCESSOR COMPANY

Amendments made: No. 8, in page 3, line 33, leave out 'On' and insert 'As a consequence of'.

No. 9, in page 3, line 42 at end add:
'(1A) Shares required to be issued in pursuance of this section shall be issued or allotted at such time or times and on such terms (as to allotment) as the Secretary of State may direct.'.—[Mr. Tebbit.]

Clause 4

FINANCIAL STRUCTURE OF THE SUCCESSOR COMPANY AND ITS SUBSIDIARIES

Amendment made: No. 10, in page 4, line 28, leave out subsection (1) and insert:
'(1) Subject to paragraph 2 of Schedule 2 to this Act, any entitlement of the Secretary of State and any liability of the Board in respect of the public dividend capital of the Board shall be extinguished immediately before the appointed day; and the aggregate nominal value of the shares in the successor company issued in pursuance of section 3 of this Act shall be equal to the amount of the public dividend capital immediately before that day.'. —[Mr. Tebbit.]

Clause 5

GOVERNMENT INVESTMENT IN SHARES AND SECURITIES OF THE SUCCESSOR COMPANY

Mr. Tebbit: I beg to move amendment No. 11, in page 5, line 29, after 'into', insert:
'or carry rights to subscribe for'.

Mr. Deputy Speaker (Mr. Richard Crawshaw): With this we may take Government amendments Nos. 12 to 19 inclusive.

Mr. Tebbit: Once again, I have to say that these amendments are technical and drafting and do not represent any change in policy.
The purpose of clause 5 is to give the Secretary of State the power, if he chooses to exercise it, to acquire ordinary voting shares in the successor company. In the Bill as originally drafted the Secretary of State's powers were limited to acquiring further shares only in the form of rights issues, that is, new shares which may be offered by the company to existing shareholders. However, during the Committee stage the Government tabled an amendment providing powers for the Secretary of State to acquire further ordinary voting shares other than in the context of rights issues, for example by purchase on the open market. Clause 5(1), as at present drafted, allows the Secretary of State to acquire ordinary voting shares or securities convertible into ordinary voting shares subject only to a maximum target investment limit defined by clause 6.
However, after looking more closely at this subsection, we find that it requires some expansion. Although it already covers ordinary voting shares and securities convertible into ordinary voting shares, it does not cover rights to subscribe for ordinary voting shares or securities which carry rights to subscribe for such shares. Both of these are types of investment which the successor company might choose to offer and it is consistent with the Government's policy to enable the Secretary of State to subscribe, should he see fit. This is achieved by amendments Nos. 11 and 12. Amendment No. 13 is consequential on the first two.
The definition of "ordinary voting shares" in clause 5(2) was rather too narrowly drawn. Amendment No. 14 modifies this definition so that it does not impose an unduly onerous restriction on the ability of the Secretary of State to acquire or subscribe for new shares.
Unless hon. Members press me, I shall not go into the close detail of this, but to some extent it will make it easier for the Secretary of State to acquire a wider range of securities provided only that they also come with the right to convert to, or acquire in some way, voting right shares.

Amendment agreed to.

Amendments made: No 12, in page 5, line 29 at end add—
'(bb) acquire rights to subscribe for any such shares; or'.

No. 13, in page 5, line 32, leave out from '(a)'to 'so' in line 33 and insert—
'(b) or (bb) above in relation to such shares, securities or rights'.

No. 14, in page 5, line 39 at end insert—
'(but the right to participate in distributions need not extend to a dividend declared out of profits earned during any period falling wholly or partly before the date of acquisition of the shares).'.

No. 15, in page 5, line 41 after 'securities', insert or 'rights'.

No. 16, in page 6, line 1 leave out 'or securities' and insert 'securities or rights'.

No. 17, in page 6, line 4 leave out 'or securities' and insert 'securities or rights'.

No. 18, in page 6, line 6 leave out 'or securities' and insert 'securities or rights'.

No. 19, in page 6, line 7 leave out 'or securities' and insert 'securities or rights'.—[Mr. Tebbit.]

Mr. Soley: I beg to move amendment No. 20, in page 6, line 9 at end insert—
'(6) The Secretary of State may not dispose of any shares or securities acquired by virtue of this Act to any other airline company in such a way that any individual shareholding exceeds 5 per cent. of the total of the ordinary shares and the total of all shareholding by other airlines shall be restricted to 20 per cent. of the ordinary shares.'
The effect of this amendment is to limit the involvement of other airlines in British Airways to 5 per cent. of the total ordinary shares in the case of any one airline or a maximum of 20 per cent. of ordinary shares for any group of airlines.
The aim behind the amendment is important. I do not think that there is any difference between the two sides of the House in wanting to make a success of British Airways, be it in the present form or in the new form that the Government want. The difference is that on the Opposition side of the House we claim that the Government are careless about the way in which they have put British Airways into competition with other airlines. There is a feeling that somehow or other British Airways will be able to stand on its own two feet without certain basic protections which are available to other airlines.
I cannot help but put this in the context of the Government's general economic philosophy when they argue that by taking away State aid, support or protection, they will enable British companies to compete equally abroad. There is no evidence to support that. We have had a recent example of unfair competition in the steel industry. In my constituency the director of a company came to see me. He told me that he had voted for the Prime Minister and the Government's policies, which he understood meant fair competition. He now felt that he was up against unfair competition from overseas.
Most national airlines have considerable Government involvement in their shareholding and directorship. In Committee, and earlier, the Minister made much of the different situation in the United States. In the United States the Federal Aviation Act prevents other airlines from

investing in American-registered airlines without the permission of the CAB. In addition, the CAB makes it abundantly clear that it will not permit foreign investment in an American airline.
The Minister may say that there is no danger of foreign investment, because the articles of association limit the right of foreign investors. However, they are affected by the EEC. The definition of "foreigner" is:
an individual who is neither a citizen of the United Kingdom and Colonies, nor a national of another member State of the European Economic Community who, by virtue of Section 2(1) of the European Communities Act 1972, is entitled for the purposes of participation in the capital of the Company to be treated no less favourably than a citizen of the United Kingdom and Colonies".
There is, therefore, the possibility of other airlines being able to buy into British Airways either from bases in Europe or the colonies, which effectively means Hong Kong, as our colonies are few and far between, and not many have the facilities to establish a national airline. The amendment is designed to protect British Airways. It will do no more than put it on an equal footing with the European airlines or the North American airlines with which it will be competing and which are protected by similar legislation. The Minister has never given sufficient assurance that British Airways will be able to compete on an equal basis with foreign airlines.
The Minister often accuses me of being full of doom and gloom, but I am full of doom and gloom only when he gives me cause. I should not feel that way if he occasionally gave me some encouragement that we were in agreement. There is cause for concern over the future of British Airways. We should ensure that they get off to a good start in their new form. I should prefer that they are not interfered with in the way that the Government propose, but that is their policy. However, there is no excuse for not providing British Airways with adequate protection in their competition with overseas airlines.
I do not want to continue our exchange of examples and hypothetical conditions, but if that protection is not afforded another airline from the EEC or our colonies could buy in to British Airways with the object of scoring competitive advantage. That could come about by an interest


in the route structure or a particular route or because one airline is doing especially well and another not so well. Another airline may be interested in acquiring the profitable helicopter or hotel side of the business. British Airways, undergoing a capital reinvestment programme in a difficult economic climate, could be forced to sell off its highly profitable hotel chain to another European airline to obtain essential capital. By buying in as allowed by the Bill, that airline could bring about such a condition much more easily.
The amendment would offer protection to British Airways. It is eminently reasonable and such a provision is apparent in other national legislation. If the Minister persists in refusing to accept our proproposal, the onus will be on him to explain why other countries provide protection and to demonstrate that British Airways will be able to compete on equal terms and will not be placed at a disadvantage compared with other national airlines.

Mr. McCrindle: I join the hon. Member for Hammersmith, North (Mr. Soley) in wishing British Airways success in its new form. Unlike him, I am anxious to move towards a situation in which there is a minority involvement by public subscription in British Airways Limited.
I am sorry that my hon. Friend the Member for Newbury (Mr. McNair-Wilson) is not in the Chamber. I forbore to intervene in his speech, but I do not believe that we should get British Airways Limited off to the best start if we seriously contemplated separating it again into BEA and BOAC, as my hon. Friend described.
For good or ill, British Airways became an entity in 1974 and it is possible to trace considerable progress since then. In its most recent report, British Airways reveals an optimism in estimates of traffic which has not been fulfilled and shows a lack of management capability in that it seriously underestimated the increase in the price of aviation fuel which contributed so much to the reduction of profits.
However, it would not be wise to conclude that the creation of two airlines, with all the problems faced by British Airways, in place of the one that we have at present, would necessarily be a move in

a more profitable direction. I do not subscribe to the ideas of my hon. Friend the Member for Newbury. I also do not accept my hon. Friend's claim that the management of British Airways is lacking in commercial judgment. My experience of the management is that it is well aware of the commercial factors surrounding the atmosphere in which the airline operates. I wished to place those matters on record before turning to the amendment.
I support the Government's policy of selling part of British Airways and I believe that we should place as few obstructions as possible in the way of a successful sale. Still fewer should be prescribed by statute and I am, therefore, not anxious to see the amendment added to the Bill. I have been tempted from time to time to support additions to the Bill, but I have been constant in my belief that we should accept the objective set by the Government and do all that we can to achieve that objective.
9 pm
If we are to resist the amendment—and I presume that the Minister will think that he should—the Government need to make their position clear on three points. First, my hon. Friend's reply should be that the Government see British Airways, in private or public ownership, continuing to be our principal flag-carrying airline. I was in the House when we had a short debate on what "flag-carrying airline" meant in the new situation. My hon. Friend will understand when I say that, no matter what the Government's relationship is with British Airways in the future, there is a need to emphasise that while it remains at its present size, while it bestraddles the world with a mass of routes, British Airways must continue to be seen by this Government, and any future Government, as our principal flag-carrying airline.
Secondly, for reasons of prestige—the Government's prestige and the country's prestige—and because we must take note of the possibility of a national emergency requiring the Government of the day to requisition a part or all of the fleet of British Airways, which is provided for in a later clause, the Government should exercise the powers of their shareholding to prevent ownership from passing into foreign control.
Thirdly, the House expects my hon. Friend to say that the Government will not willingly see more than a comparatively small shareholding taken up by competitor airlines. However, there is a positive case for encouraging an injection of other airline expertise into British Airways. Where this has happened elsewhere in the world it has seldom been to the detriment of the airline, provided that the percentage of such a shareholding is minimal.
I go further. Apart from there being a case for a minority shareholding by a competitor airline, there is a powerful case for a shareholding being taken up by, for example, travel agencies or groups of travel agencies. After all, if the future management is anxious to know what the customer thinks about British Airways services, there are few in a better position to tell it than the representatives of the travel agencies.
Therefore, I hope that we shall in no way discourage the movement towards a minority shareholding by a competitor airline, and even an involvement by a group of travel agencies. There are good reasons for a minority shareholding. If any hon. Member is in doubt, I remind him that there is already a minority holding by British Airways in competitor airlines, and an airline that is about to become a competitor, in the shape of Cathay Pacific.

Mr. Soley: I take it that the hon. Gentleman does not disagree that my amendment allows minority participation. Indeed, it would allow travel agents to be involved, if that were the wish. It is not against that.

Mr. McCrindle: I accept that. What I am saying is that, whilst I understand the hon. Gentleman's sentiments and. I suppose, could be said to be endorsing some of them, I do not accept that it is necessary to truss up the future British Airways Limited with unnecessary amendments. I hope that the hon. Gentleman's ideas and those that I have just added, such as the minority shareholding by a group of travel agencies, will be accepted by my hon. Friend in general principle. Equally, the Government are entitled to say that it is not necessary to go to the extent of tying up every last

area of possible shareholding involvement by accepting the amendment.
I hope that the hon. Gentleman appreciates that I am going considerably along the way to accepting his sentiments. My hon. Friend the Under-Secretary would be right in broadly accepting the sentiments that both the hon. Gentleman and I have expressed but in resisting the need to add an amendment such as this.

Mr. Tebbit: As hon. Members have said, we have already debated a similar amendment in Committee. I repeat that, as a matter of broad principle, the Government see no reason why other airlines should not be allowed to invest in British Airways if they wish. That is the point that my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) makes. As my hon. Friend said, it is not unusual for major international airlines to have a proportion of shareholders from other airlines. British Airways has trade investments in other airways including Cyprus Airways. Air Mauritius and most notably, perhaps, some 15 per cent. of Cathay Pacific Airways.
It would be a most unusual private sector company that had a statutory restriction on the holding of its shares by other companies. Looking at the terms of the amendment and bearing in mind the size of British Airways, I do not think that it can be held that other airlines would come in to buy the equity of British Airways Limited in order to damage it. If it was a foreign investment from outside the European Community, it could easily be prohibited by the provisions in the articles of the company and our law. I do not believe that there is lurking somewhere within the Community an airline such as Alitalia or Air France determined to buy into British Airways to damage it. Indeed, if that was overdone and British Airways ceased to be an airline under clear British control, one would run into the problem that British Airways would lose its route rights under sections 22 and 23 of the Civil Aviation Act 1971.
As I said in Committee, I am not sure how this fear of the damage that would be done by modest shareholdings by other airlines and, indeed, foreigners, in our airline arises. If it had been good for Cathay Pacific to have 15 per cent. of its


shares held by British Airways, would it be bad for British Airways if it had 5, 10 or 15 per cent. of its shares held by Cathay Pacific? It would be difficult to argue that this was harmful. We must not allow ourselves to slide into nightmarish dreams about foreign interests seeking to disrupt British Airways.
The point was made about British Airways as a flag-carrier. I can only say, as I have stated before, that British Airways is such a large company, with such a wide network, that it must inevitably be regarded, for as far ahead as I can see, as Britain's prime flag-carrier across the world generally, except in those areas where British Caledonian has established itself, such as South America and the west coast of Africa, as the prime British flag-carrier. The Bill will make no difference to that situation. If it makes British Airways that bit more competitive as I hope it will, it should establish British Airways even more strongly as the great British flag-carrier.

Mr. Soley: I shall be brief, but I fear that I shall have to press this matter to a vote. The Minister has not convinced me that he has given adequate thought to the dangers confronting British Airways. If we stand by and say, at a time when we are watching the de-industrialisation of Britain, that British Airways will be able to manage and that it will be backed as has happened with the steel industry or any other industry, we may be in the grim position—perhaps a nightmare that comes true—of seeing British Airways, in a year or two, in the same position as British Steel. That is the problem.
It is not sufficient to say that British Airways will be protected by the Government's general interest in its welfare. It is natural that the Government should want British Airways to be the primary flag-carrier. Yet, at the same time, the Government are saying that routes should be opened to far more competition and prices brought down. No one is against bringing down prices and making air travel easier for the travelling public.
The problem is that, at the moment, British Airways has to carry routes that are not profitable. Even if those routes are dropped—that is not expected to happen—British Airways will have to compete on routes such as Hong Kong

for which one has already seen cheap flights advertised. Someone will lose out. Not all the airlines will win all the time on that basis. Presumably the Minister assumes that the number of travelling passengers will increase and therefore lead to profitability on those routes for those companies. However, that assumes that the world economic climate will support that sort of air travel, and that is open to question.
We may find that the position of British Airways as the major flag-carrier is whittled away. It is not a case of another airline buying in with some malicious intention to damage. It is the case of a foreign airline buying in with the intention of picking up bits because it has an interest in surviving and building up its own empire. If such a company is in a stronger position at a time when, for example, British Airways is re-equipping and going through an economically difficult time, it is in the interests of that foreign airline to buy in and pick up any bits that are available to it, not with the intention of destroying British Airways, but in the normal process of competition. That is the danger facing British Airways.
I do not want to be unduly gloomy about it. However, if we do not take these matters as seriously as I suggest, we may find in a few years that British Airways are in the same position as British Steel Corporation.

Mr. Tebbit: The hon. Gentleman seems to forget that the British Steel Corporation is a nationalised corporation which has got into this mess. It has landed in the mess that it is in primarily because of a combination of the misdeeds of the Government, management and trade unions. What I am doing is to get British Airways away from the risk of being maladministered by the Government and away from Government interference. The point about the British Steel Corporation is that the responsibility for most of the jobs which have been lost, and which are to be lost in the next year or so, is to be put at the door of Lord Beswick and the Goverment's failure to carry out the proper management of the corporation. I am taking British Airways away from the risk of interference of the kind that the British Steel Corporation suffered from the last Government and which has led to the disaster which it is now experiencing.

Mr. Soley: I find it difficult to believe that anyone with the Minister's experience can be so politically naive as to talk about the maladministration of a nationalised industry at a time when bankruptcies among private companies are rocketing. Is the Minister suggesting that they are due to maladministration? Are private companies badly administered? Is that why they are going bankrupt? If it is maladministration, it means that maladministration can affect nationalised industries and private enterprise, too. However, there are economic causes over and above maladministration, and they affect both nationalised and private industries. It is this careless attitude of the Government towards the welfare of British industry in terms of unfair competition about which we complain. Directors of companies in my constituency, most of them Conservative supporters, tell me that they did not realise that they would be competing on unequal terms with firms in Europe and elsewhere. That is where they are feeling the draught. If I say to them, as the Minister says, that their difficulties are due to maladministration and that they had better pack their bags and go, they will not be too happy.
The Government fail to understand the economic problems facing British industry. I do not claim to be an expert in economics or industry, but I know the problems faced in both private and public industries. I chose the example of the British Steel Corporation. It is fair to say that it has experienced problems

in the past. However, we know that every other major steel-producing country gives far greater support to its steel industry than Britain ever has. That is why the British Steel Corporation is in trouble.

Let us have no more talk of maladministration. Private industries can be just as bureaucratic and just as inefficient as publicly-owned industries. I have worked for both kinds, and I know that at times it is difficult to choose between them, although it must be said that nationalised industries usually look after their work force and often their customers a bit better than do private industries do—[Interruption.] The Minister may well laugh, but I could produce evidence for that.

I do not wish to keep the House any longer. Two things are clear. One is that the overall philosophy of the Government is doing serious damage to the British economy. The second is that, in the case of British Airways, the Government are launching something which we all want to be successful, but they are launching it in such a way as to limit the possibility of success in the face of unfair competition. I therefore call for a vote on the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 235, Noes 293.

Division No. 3791
AYES
[9.15 pm


Abse, Leo
Carmichael, Neil
Douglas, Dick


Adams, Allen
Carter-Jones, Lewis
Douglas-Mann, Bruce


Allaun, Frank
Cartwright, John
Dubs, Alfred


Anderson, Donald
Clark, Dr David (South Shields)
Duffy, A. E. P.


Archer, Rt Hon Peter
Cocks, Rt Hon Michael (Bristol S)
Dunnett, Jack


Armstrong, Rt Hon Ernest
Cohen, Stanley
Dunwoody, Mrs Gwyneth


Ashley, Rt Hon Jack
Coleman, Donald
Eadie, Alex


Ashton, Joe
Concannon, Rt Hon J. D.
Eastham, Ken


Atkinson, Norman (H'gey, Tott'ham)
Conian, Bernard
Ellis, Raymond (NE Derbyshire)


Bagier, Gordon A. T.
Cowans, Harry
English, Michael


Barnett, Guy (Greenwich)
Craigen, J. M. (Glasgow, Maryhill)
Ennals, Rt Hon David


Barnett, Rt Hon Joel (Heywood)
Crowther, J. S.
Evans, loan (Aberdare)


Bennett, Andrew (Stockport N)
Cryer, Bob
Evans, John (Newton)


Bidwell, Sydney
Cunliffe, Lawrence
Ewing, Harry


Booth, Rt Hon Albert
Cunningham, George (Islington S)
Faulds, Andrew


Boothroyd, Miss Betty
Cunningham, Dr John (Whitehaven)
Field, Frank


Bottomley, Rt Hon Arthur (M'brough)
Dalyell, Tam
Fitch, Alan


Bradley, Tom
Davidson, Arthur
Flannery, Martin


Bray, Dr Jeremy
Davies, Rt Hon Denzil (Llanelli)
Fletcher, Ted (Darlington)


Brown, Hugh D. (Provan)
Davies, Ifor (Gower)
Foot, Rt Hon Michael


Brown, Robert C. (Newcastle W)
Davis, Clinton (Hackney Central)
Ford, Ben


Brown, Ron (Edinburgh, Leith)
Deakins, Eric
Forrester, John


Buchan, Norman
Dean, Joseph (Leeds West)
Foster, Derek


Callaghan, Jim (Middleton &amp; P)
Dempsey, James
Fraser, John (Lambeth, Norwood)


Campbell, Ian
Dewar, Donald
Freeson, Rt Hon Reginald


Campbell-Savours, Dale
Dixon, Donald
Garrett, John (Norwich S)


Canavan, Dennis
Dobson, Frank
Gilbert, Rt Hon Dr John


Cant, R. B.
Dormand, Jack
Ginsburg, David




Golding, John
Mackenzie, Rt Hon Gregor
Sandelson, Neville


Gourlay, Harry
Maclennan, Robert
Sever, John


Graham, Ted
McNally, Thomas
Sheerman, Barry


Grant, George (Morpeth)
McWilliam, John
Sheldon, Rt Hon Robert (A'ton-u-L)


Grant, John (Islington C)
Magee, Bryan
Shore, Rt Hon Peter (Step and Pop)


Hamilton, James (Bothwell)
Marks, Kenneth
Short, Mrs Renée


Hamilton, W. W. (Central Fife)
Marshall, David (Gl'sgow, Shettles'n)
Silverman, Julius


Harrison, Rt Hon Walter
Marshall, Jim (Leicester South)
Skinner, Dennis


Hart, Rt Hon Dame Judith
Martin, Michael (Gl'gow, Springb'rn)
Smith, Rt Hon J. (North Lanarkshire)


Hattersley, Rt Hon Roy
Mason, Rt Hon Roy
Soley, Clive


Haynes, Frank
Maxton, John
Spearing, Nigel


Healey, Rt Hon Denis
Maynard, Miss Joan
Spriggs, Leslie


Heffer, Eric S.
Meacher, Michael
Stallard, A. W.


Home Robertson, John
Mellish, Rt Hon Robert
Stewart, John (East Renfrewshire)


Homewood, William
Mikardo, Ian
Stoddart, David


Hooley, Frank
Millan, Rt Hon Bruce
Stott, Roger


Horam, John
Mitchell, R. C. (Soton, Itchen)
Strang, Gavin


Howell, Rt Hon Denis (B'ham, Sm H)
Morris, Rt Hon Alfred (Wythenshawe)
Straw, Jack


Huckfield, Les
Morris, Rt Hon Charles (Openshaw)
Summerskill, Hon Dr Shirley


Hudson Davies, Gwilym Ednyfed
Morris, Rt Hon John (Aberavon)
Taylor, Mrs Ann (Bolton West)


Hughes, Mark (Durham)
Morton, George
Thomas, Dafydd (Merioneth)


Hughes, Roy (Newport)
Moyle, Rt Hon Roland
Thomas, Jeffrey (Abertillery)


Janner, Hon Greville
Newens, Stanley
Thomas, Mike (Newcastle East)


Jay, Rt Hon Douglas
Oakes, Rt Hon Gordon
Thomas, Dr Roger (Carmarthen)


John, Brynmor
Ogden, Eric
Thorne, Stan (Preston South)


Johnson, James (Hull West)
O'Halloran, Michael
Tilley, John


Johnson, Walter (Derby South)
O'Neill, Martin
Tinn, James


Jones, Rt Hon Alec (Rhondda)
Orme, Rt Hon Stanley
Torney, Tom


Jones, Barry (East Flint)
Owen, Rt Hon Dr David
Varley, Rt Hon Eric G.


Jones, Dan (Burnley)
Palmer, Arthur
Wainwright, Edwin (Dearne Valley)


Kaufman, Rt Hon Gerald
Park, George
Walker, Rt Hon Harold (Doncaster)


Kerr, Russell
Parker, John
Watkins, David


Kilroy-Silk, Robert
Parry, Robert
Weetch, Ken


Kinnock, Neil
Pendry, Tom
Wellbeloved, James


Lambie, David
Powell, Raymond (Ogmore)
Welsh, Michael


Lamborn, Harry
Prescott, John
White, Frank R. (Bury &amp; Radcliffe)


Lamond, James
Price, Christopher (Lewisham West)
White, James (Glasgow, Pollok)


Leadbitter, Ted
Race, Reg
Whitlock, William


Leighton, Ronald
Radice, Giles
Willey, Rt Hon Frederick


Lestor, Miss Joan (Eton &amp; Slough)
Rees, Rt Hon Merlyn (Leeds South)
Williams, Rt Hon Alan (Swansea W)


Lewis, Arthur (Newham North West)
Richardson, Jo
Wilson, William (Coventry SE)


Lewis, Ron (Carlisle)
Roberts, Albert (Normanton)
Winnick, David


Litherland, Robert
Roberts, Allan (Bootle)
Woodall, Alec


Lofthouse, Geoffrey
Roberts, Gwilym (Cannock)
Woolmer, Kenneth


Lyon, Alexander (York)
Robertson, George
Wrigglesworth, Ian


Lyons, Edward (Bradford West)
Robinson, Geoffrey (Coventry NW)
Wright, Sheila


Mabon, Rt Hon Dr J. Dickson
Rodgers, Rt Hon William
Young, David (Bolton East)


McCartney, Hugh
Rooker, J. W.



McDonald, Dr Oonagh
Roper, John
TELLERS FOR THE AYES:


McElhone, Frank
Ross, Ernest (Dundee West)
Mr. Austin Mitchell and Mr. Terry Davis.


McKay, Allen (Penistone)
Rowlands, Ted



McKelvey, William
Ryman, John





NOES


Adley, Robert
Brittan, Leon
Critchley, Julian


Aitken, Jonathan
Brocklebank-Fowler, Christopher
Crouch, David


Alexander, Richard
Brooke, Hon Peter
Dean, Paul (North Somerset)


Ancram, Michael
Brotherton, Michael
Dickens, Geoffrey


Arnold, Tom
Brown, Michael (Brigg &amp; Sc'thorpe)
Dorrell, Stephen


Aspinwall, Jack
Bruce-Gardyne, John
Douglas-Hamilton, Lord James


Atkins, Rt Hon H. (Spelthorne)
Bryan, Sir Paul
Dover, Denshore


Atkins, Robert (Preston North)
Buchanan-Smith, Hon Alick
du Cann, Rt Hon Edward


Baker, Kenneth (St. Marylebone)
Buck, Antony
Dunn, Robert (Dartford)


Baker, Nicholas (North Dorset)
Budgen, Nick
Durant, Tony


Beaumont-Dark, Anthony
Bulmer, Esmond
Eden, Rt Hon Sir John


Bell, Sir Ronald
Burden, F. A.
Edwards, Rt Hon N. (Pembroke)


Bendall, Vivian
Butcher, John
Eggar, Timothy


Benyon, Thomas (Abingdon)
Butler, Hon Adam
Emery, Peter


Benyon, W. (Buckingham)
Carlisle, Kenneth (Lincoln)
Eyre, Reginald


Best, Keith
Chalker, Mrs Lynda
Fairgrieve, Russell


Bevan, David Gilroy
Channon, Paul
Faith, Mrs Sheila


Biffen, Rt Hon John
Chapman, Sydney
Farr, John


Biggs-Davison, John
Churchill, W. S.
Fell, Anthony


Blackburn, John
Clark, Hon Alan (Plymouth, Sutton)
Fenner, Mrs Peggy


Blaker, Peter
Clark, Sir William (Croydon south)
Finsberg, Geoffrey


Body, Richard
Clarke, Kenneth (Rushcliffe)
Fisher, Sir Nigel


Bonsor, Sir Nicholas
Clegg, Sir Walter
Fletcher, Alexander (Edinburgh N)


Boscawen, Hon Robert
Cockeram, Eric
Fletcher-Cooke, Charles


Bottomley, Peter (Woolwich West)
Colvin, Michael
Fookes, Miss Janet


Bowden, Andrew
Cope, John
Forman, Nigel


Boyson, Dr Rhodes
Cormack, Patrick
Fowler, Rt Hon Norman


Braine, Sir Bernard
Corrie, John
Fraser, Peter (South Angus)


Bright, Graham
Costain, A. P.
Fry, Peter


Brinton, Tim
Cranborne, Viscount
Galbraith, Hon T. G. D.







Gardiner, George (Reigate)
McNair-Wilson, Michael (Newbury)
Roberts, Wyn (Conway)


Gardner, Edward (South Fylde)
McNair-Wilson, Patrick (New Forest)
Rost, Peter


Garel-Jones, Tristan
McQuarrie, Albert
Sainsbury, Hon Timothy


Glyn, Dr Alan
Madel, David
St. John-Stevas, Rt Hon Norman


Goodhew, Victor
Major, John
Scott, Nicholas


Goodlad, Alastair
Marland, Paul
Shaw, Michael (Scarborough)


Gorst, John
Marlow, Tony
Shelton, William (Streatham)


Gow, Ian
Marshall, Michael (Arundel)
Shepherd, Colin (Hereford)


Gower, Sir Raymond
Marten, Neil (Banbury)
Shepherd, Richard(Aldridge-Br'hills)


Gray, Hamish
Mates, Michael
Shersby, Michael


Greenway, Harry
Mather, Carol
Silvester, Fred


Griffiths, Eldon (Bury St Edmunds)
Maude, Rt Hon Angus
Sims, Roger


Griffiths, Peter (Portsmouth N)
Mawby, Ray
Skeet, T. H. H.


Grist, Ian
Mawhinney, Dr Brian
Speed, Keith


Gryils, Michael
Maxwell-Hyslop, Robin
Speller, Tony


Gummer, John Selwyn
Mayhew, Patrick
Spence, John


Hamilton, Hon Archie (Eps'm&amp;Ew'il)
Mellor, David
Spicer, Jim (West Dorset)


Hamilton, Michael (Salisbury)
Meyer, Sir Anthony
Spicer, Michael (S Worcestershire)


Hampson, Dr Keith
Miller, Hal (Bromsgrove &amp; Redditch)
Sproat, Iain


Hannam, John
Mills, Iain (Meriden)
Squire, Robin


Haselhurst, Alan
Mills, Peter (West Devon)
Stanbrook, Ivor


Havers, Rt Hon Sir Michael
Miscampbell, Norman
Stanley, John


Hawksley, Warren
Mitchell, David (Basingstoke)
Steen, Anthony


Hayhoe, Barney
Moate, Roger
Stevens, Martin


Heath, Rt Hon Edward
Molyneaux, James
Stewart, Ian (Hitchin)


Heddle, John
Monro, Hector
Stewart, John (East Renfrewshire)


Henderson, Barry
Montgomery, Fergus
Stokes, John


Heseltine, Rt Hon Michael
Moore, John
Stradling Thomas, J.


Hicks, Robert
Morgan, Geraint
Tapsell, Peter


Higgins, Rt Hon Terence L.
Morris, Michael (Northampton, Sth)
Taylor, Robert (Croydon NW)


Hill, James
Morrison, Hon Charles (Devizes)
Tebbit, Norman


Hogg, Hon Douglas (Grantham)
Morrison, Hon Peter (City of Chester)
Temple-Morris, Peter


Holland, Philip (Carlton)
Mudd, David
Thomas, Rt Hon Peter (Hendon S)


Hooson, Tom
Murphy, Christopher
Thompson, Donald


Hordern, Peter
Myles, David
Thorne, Neil (Ilford South)


Howell, Rt Hon David (Guildford)
Neale, Gerrard
Thornton, Malcolm


Howell, Ralph (North Norfolk)
Needham, Richard
Townend, John (Bridlington)


Howells, Geraint
Nelson, Anthony
Townsend, Cyril D. (Bexleyheath)


Hunt, David (Wirral)
Neubert, Michael
Trippier, David


Hunt, John (Ravensbourne)
Newton, Tony
Trotter, Neville


Irving, Charles (Cheltenham)
Nott, Rt Hon John
van Straubenzee, W. R.


Jenkin, Rt Hon Patrick
Onslow, Cranley
Vaughan, Dr Gerard


Johnson Smith, Geoffrey
Oppenhelm, Rt Hon Mrs Sally
Viggers, Peter


Jopling, Rt Hon Michael
Page, Rt Hon Sir R. Graham
Waddington, David


Kaberry, Sir Donald
Page, Richard (SW Hertfordshire)
Wakeham, John


Kellett-Bowman, Mrs Elaine
Parkinson, Cecil
Waldegrave, Hon William


Kimball, Marcus
Parris, Matthew
Walker, Bill (Perth &amp; E Perthshire)


Kitson, Sir Timothy
Patten, Christopher (Bath)
Walker-Smith, Rt Hon Sir Derek


Knox, David
Patten, John (Oxford)
Wall, Patrick


Lamont, Norman
Pattie, Geoffrey
Waller, Gary


Lang, Ian
Pawsey, James
Walters, Dennis


Langford-Holt, Sir John
Penhaligon, David
Ward, John


Latham, Michael
Percival, Sir Ian
Warren, Kenneth


Lawrence, Ivan
Pollock, Alexander
Watson, John


Lawson, Nigel
Porter, George
Wells, John (Maidstone)


Lee, John
Price, David (Eastleigh)
Wells, Bowen (Hert'rd &amp; Stev'nage)


Lennox-Boyd, Hon Mark
Prior, Rt Hon James
Wheeler, John


Lester, Jim (Beeston)
Proctor, K. Harvey
Whitelaw, Rt Hon William


Lewis, Kenneth (Rutland)
Raison, Timothy
Whitney, Raymond


Lloyd, Ian (Havant &amp; Waterloo)
Rathbone, Tim
Wickenden, Keith


Lloyd, Peter (Fareham)
Rees, Peter (Dover and Deal)
Wiggin, Jerry


Loveridge, John
Rees-Davies, W. R.
Williams, Delwyn (Montgomery)


Luce, Richard
Renton, Tim
Winterton, Nicholas


Lyell, Nicholas
Rhodes James, Robert
Wolfson, Mark


McCrindle, Robert
Rhys Williams, Sir Brandon
Young, Sir George (Acton)


Macfarlane, Neil
Ridley, Hon Nicholas



MacGregor, John
Ridsdale, Julian
TELLERS FOR THE NOES:


MacKay, John (Argyll)
Rifkind, Malcolm
Mr. Spencer Le Marchant and Mr. Anthony Berry.


Macmillan, Rt Hon M. (Famham)
Roberts, Michael (Cardiff NW)

Question accordingly negatived.

Clause 6

TARGET INVESTMENT LIMIT FOR GOVERNMENT SHAREHOLDING UNDER SECTIONS 3 AND 5

Mr. Tebbit: I beg to move amendment No. 22, in page 6, line 32, after 'may', insert '(a)'.

Mr. Deputy Speaker: With this we may also take Government amendment No. 23.

Mr. Tebbit: These amendments are partly a consequence of Government amendments Nos. 11 and 12 to clause 5(1) dealing with the type of security that the Government will be able to acquire under the Bill, and partly to extend the circumstances in which clause 6(4), as originally drafted, was applicable.
Clause 6 provides for an upper limit to be set on the size of the Government shareholding in the successor company, and subsection (3) imposes a duty on the Secretary of State to exercise his powers so as to ensure that that limit is not exceeded. The intention of subsection (4) is to provide a derogation from that duty to cover circumstances where it is necessary for the Government to take action if they wish to be sure of retaining a given shareholding but where it is possible, because of the unforeseeable behaviour of other people, that the action will result in the Government shareholding being increased. If that happens the Government are required to comply with the limit—that is, in practice to sell the excess shares as soon as is reasonably practicable.
The most obvious case where this might occur is in a rights issue where the Government subscribe to the full extent of their existing shareholding but where other existing shareholders decide not to do so. That is the only case covered by the subsection as presently drafted. However, a similar problem could arise where the Government held securities, other than as a member, which were convertible into or carried the right to subscribe for ordinary shares in the successor company.
For example, the terms of convertible stock might provide for conversion on a certain day or within a certain period. If the Government wished to be sure of retaining their existing proportionate shareholding they would have to convert all their stock in the expectation that all other shareholders would convert their stock. Some might decide not to exercise their conversion rights, with the result that the Government shareholding would be increased so that, inadvertently, the target investment limit was exceeded. The amendment is designed to deal with that eventuality.
9.30 pm
Clause 5, as reported from the Committee, provided for the Secretary of State to acquire convertible securities of the successor company. The Government amendment to clause 5 also provides for the acquisition of rights to subscribe to ordinary shares, and securities that carry rights to subscribe for ordinary shares, of the successor company. It would be

wrong for the Secretary of State to be inhibited from exercising the right conferred by the securities for fear of exceeding the target investment limit. The amendments will ensure that he can exercise such rights without restriction, or direct his nominees to do so, provided that any excess shares above the target investment limit acquired as a result are disposed of in accordance with the provision of clause 6(4). The provisions will be generally regarded as helpful, and I commend them to the House.

Amendment agreed to.

Amendment made: No. 23, in page 6, line 33, leave out
'a member of the successor company' and insert 'an existing holder of shares in or securities of the successor company or as an existing holder of a right to subscribe for any such shares;

(b) exercise or direct any nominee of his to exercise any right to subscribe for such shares;'.—[Mr. Tebbit.]

Clause 9

INTERPRETATION OF PART I

Mr. Clinton Davis: I beg to move amendment No. 29, in page 9, line 9, leave out 'and the Treasury' and insert
'the Treasury and the trade unions which are recognised as representing their employees by the Board.'
The position envisaged in the Bill with regard to consultation about the appointed day is that the Government will be under a statutory obligation to consult the board and the Treasury. The Minister is on record as saying that consultation with the board is tantamount to consultation with the work force, because he presumes that the board will consult the work force about matters that are the subject of consultation. That is a somewhat illusory way of considering the matter. In this instance, we wish to know to what extent the consultations that the Minister would have pursuant to clause 9 would have an aura of confidentiality about them. If that were the position, the board would necessarily feel, and might be obliged to be, constrained about consulting with the work force. That would be a thoroughly deplorable state of affairs.
Even if the board was free from such constraints, what effect would such consultations have on Government thinking?


I am bound to say, as I have said before, that I am extremely disappointed about the way in which the Minister has failed to carry out the task of consultation about the principle of the Bill. It is common ground that there was no consultation before the Minister announced or published in the House the principle underlying the Bill. Why the Government chose to deal with the matter in that way I find utterly bewildering.
At least as a matter of common courtesy, the Minister should have had the management and the trade unions in to discuss so important a proposal. There was no question of the matter requiring such speed that consultation was rendered unnecessary or impossible. In the event, we know that, although it was announced that last July that the Government were embarking on this policy, it took a considerable time before the Bill went into Committee, and there has been a considerable delay between the end of the Committee stage and the beginning of the Report stage. Time, therefore, was not of the essence.
I cannot begin to understand why, in the interests of the fulfilment of their own policy, the Government did not engage in a wider form of consultation. After all, the Government might have been able to persuade those who have a vested interest in the industry that the Government's proposals ought to be supported. On the other hand, they might not have succeeded. One recognises that, if one seeks to introduce controversial policies, one will not please everybody. The Minister realises that he has not pleased me up to now. But when such a radical change is sought it is incumbent upon a Government to introduce into their thinking the people who will be involved. The Government failed to do that.
There is a lot of damage to be repaired, so that, pragmatically speaking, there is a necessity for the Government to broaden the possibilities of consultation. The Minister may say that his door is constantly open to receive the trade unions. He does not appear to realise the bitterness that has been provoked by initiating these policies without discussion. It is no good the Minister simply saying "My door is constantly open to the trade unions." It is his job positively to invite

them to discuss matters and to try to repair the damage—perhaps even to go to see them. After all, in industry we should be trying to achieve the breaking down of the suspicion that exists.
If the Minister feels that he is innocent of the charge that I have laid, so be it. But he knows—I think that he realises this because he is sensitive to what is happening—that his duty is to try to defuse the position that I can assure him has arisen.

Mr. Onslow: I am sure that the hon. Gentleman is speaking in good faith, but in my most recent contacts with members of British Airways' trade unions I have not detected the signs of the bitterness of which he speaks. Perhaps he would explain a little more specifically the nature of the bitterness that he is talking about.

Mr. Davis: I assure the hon. Member that I have had numerous discussions with the trade unions involved in the industry. I am not trying to make a party point or to mislead the House. I am putting quite categorically on the record—and it can be confirmed—that there was a great deal of bitterness about the way in which the Minister failed to consult or talk to the unions at the material time, which was before he announced his policies.
Perhaps in the past the management and trade unions had been led by me or by various Secretaries of State to think that they would be brought into such discussions before changes of policy were announced. Perhaps in the case of the Minister they were not entitled to hold such expectations.
I make two points. First, it is my belief that the Minister and the Secretary of State were wrong to go about the announcement in the way they did. Secondly, I believe that even if they feel that they have been acquitted of that charge—I cannot see how they can feel that—they have a duty to go out of their way now to make sure that other voices are heard.
We shall discuss later the matter relating to the British Airports Authority. That is something about which the Government might have consulted earlier, before the Bill was introduced. It pays a Government to listen to other people from time to time. That is why I am urging


the Government—I am not making a great song and dance about it—in the interests of better industrial relations, that this is what they should do. After all, when we talk about clause 9 and the appointed day, we are talking about a situation in which the Minister has stated that he does not intend to arrive at a position in which there is in effect a vacuum between the creation of the successor company and the sale of the shares. It follows, therefore, that the decision to activate this part of the Bill is of monumental importance to those whose livelihood depends on the successful operation of British Airways.
It is true—it has been argued not only in this House but in The Times as recently as 12 May—that
Given the contortions which appear to be necessary for a flotation and the financial problems it would create for the airline, it is difficult at this stage to see any convincing justification for going ahead.
In spite of those warnings from a number of people who have no axe to grind politically, perhaps, and who are certainly not enunciating the Labour Party's point of view, if the Government go ahead and a substantial number of people think that it is not a very propitious thing for them to do, that there is anxiety about their jobs and their livelihood, bearing in mind that timing is of the essence, as the Minister has conceded, and that bad timing or a bad launch could have disastrous effects not only on the economic prospects of the airline but also on the morale of staff and management, is it not right that the Government should be under a very clear duty to consult directly those representing the work force?
I believe that, because of the way in which this has been handled by the Government in the past, it is necessary to import a statutory duty to consult. If the record had been better, and if the Minister had been able to discharge that responsibility properly, one would have been able to say "All right. We understand that Ministers consult." But the anxiety that is going through the minds of a number of trade unionists—and leading trade unionists in this field have proved over the years to be very responsible people—is that the Minister may have his door open and we may go to him but that he will not be prepared to listen to what we have to say. After a

meeting of that kind, it is no use the Minister saying "Thank you very much. I shall, of course, take note of what you have said." They want to believe that any views that they express to him will be listened to and that, if they are able to convince the Minister by a reasonable dialogue, he will act on their suggestions.
For the life of me, I cannot see that that is an outrageous proposition to put to the Minister. It is my experience—I believe that it is the Minister's, too, because he is a former employee of British Airways—that the work force in British Airways care about the success of the airline. I believe that they have a good deal of which to be proud. I think that it is a good airline. There is plenty of room for improvement, and they would concede that as well as anyone else. But they want to be listened to when they make representations. They want to have access through their representatives in the trade unions to the Minister. They want to feel that their voice counts. I believe that they have a right to know what will happen to their jobs, pensions and contractual rights.
As I have said, unless there is a statutory requirement, there is a strong feeling that the present Minister will care nothing for their views. I do not believe that I have overstated the case, despite the intervention of the hon. Member for Woking (Mr. Onslow) who took the trouble to have discussions with some of the unions concerned. That is a good thing. The fact that the Conservative aviation group went to that trouble is something of which its members can feel properly proud.
9.45 pm
However, notwithstanding the hon. Gentleman's feeling about that meeting, the united voice of those with whom I have spoken, including those who attended the meeting that the hon. Gentleman attended, is that they are very suspicious about the value of consulting. It is therefore incumbent upon the Minister to show that that is a misplaced feeling and that consultation is something that he values, will want to encourage and sees as a way of stimulating better industrial relations and better relations between his Department and the unions.

Mr. Tebbit: It seems that the heart of this matter is the fact that the hon. Member for Hackney, Central (Mr. Davis) is still upset because the Secretary of State chose to tell Parliament of the Government's decision before he told the unions. There can be no other way of putting it. [Interruption.] If the hon. Member for Huddersfield, East (Mr. Sheerman) wants to make a contribution, I shall be glad to give way to him, but if he shouts things from a sedentary position, he adds neither to his reputation nor to the debate.
There was no way in which the Secretary of State could discuss this proposition in principle with the unions before he made the announcement to the House. It just would not have been right or proper.
We have had most of these discussions already in Committee. I do not see what benefit it would be to the employees of British Airways to have a formal requirement that the Government should consult the unions before setting the appointed day. We shall choose an appointed day as near as we can to the time at which we envisage that the shares will be offered for sale. Then we must act quickly and without complications which would reduce the price that we would get for the shares.
That will involve judgment. We shall appoint the day after consultation with our professional advisers and with the board of British Airways. Therefore, the decision will be taken after we have received the views and advice of those with a legitimate and appropriate interest in the matter. The employees of BA of course have a legitimate interest, which I am sure will be adequately served by the consultation with the BA board. The board is, after all, the employer and, in every thing but perhaps the technical, legal sense, its members are themselves employees as well.
From the moment that the policy was announced, the Secretary of State and I made it plain that we were willing to consult the unions at their pleasure on all matters in the Bill. We could not undertake to discuss with them the essential policy at the heart of the matter, because that is a matter to be decided by Parliament and not outside. However, the Secretary of State extended an invitation to the relevant unions for this purpose im-

mediately after his statement of 20 July and a meeting was held the following week.
Naturally enough, the trade union representatives said that they needed more time to gather their comprehensive view, and my right hon. Friend invited them to a further meeting before publication of the Bill. Unfortunately, they expressed the view at that meeting that they were not prepared to discuss any details of our proposals for British Airways on the grounds that they were fundamentally opposed to the policy and would be directing their efforts accordingly. Therefore, our efforts to consult about all these matters were frustrated, not by our obstinacy but by the fact that the trade unions maintained that they did not wish to enter into consultations.

Mr. Sheerman: Is it not the case that the Government had no mandate in their manifesto to make a change in the ownership of British Airways? They then made an announcement that they would make a change, and after that they announced that there were to be consultations with the trade unions. But they had already made up their minds. Would it not have been better to enter into consultations with the trade unions about the proposals before they actually became proposals?

Mr. Tebbit: Would it not be right to consult Parliament first by saying what we have in mind, rather than telling the trade unions? Surely that is the right way to go about it.

Mr. Clinton Davis: Was there any consultation with the chairman or other members of the board of British Airways or anyone else involved in the aviation industry before the publication of the Bill?

Mr. Tebbit: Of course there was a great deal of consultation before the publication of the Bill. I have just made it perfectly plain that the trade unions were offered consultation before publication.

Mr. Davis: I asked whether there was any consultation before the announcement was made in Parliament—that is, prior to the publication of the Bill. That is the material date. Was there any discussion with the chairman, management or


chief executive of British Airways or any members of the board or anyone else involved in the airline business?

Mr. Tebbit: I repeat what I said. There was extensive consultation with the board of British Airways before the publication of the Bill. Secondly, the trade unions were told that it was open to them to engage in consultations before the publication of the Bill. That is the question that the hon. Member asked and that is the question to which I have replied. He may wish to ask another question and I am perfectly willing to reply to anything else, but I must repeat that I have answered that question.

Mr. Davis: The question that I seek to address to the Minister is this: before any announcement was made in the House about Government policy, did the Secretary of State or the Minister engage in any discussions of any kind—consultations or otherwise—with members of the British Airways board or anyone else in the airline industry? The Minister has confirmed that prior to publication of the Bill it would have been improper to hold consultations with the trade unions before he came to Parliament. I want to know whether he held any discussions with anyone else before he came to Parliament.

Mr. Tebbit: The British Airways board was informed of my right hon. Friend's statement before it was made. There was a problem here. I would have informed the trade union side through the medium of the chairman of the National Joint Council. Unfortunately, a message which should have been transmitted to him was not so transmitted. That was not the fault of my Department or of the chairman. I intended that he should know before the statement was made, in the same way as the chairman of the British Airways board knew. But we did not engage in consultations with the chairman of the board. We informed Parliament.

Mr. Davis: Why did not the hon. Gentleman satisfy himself that such a communication would reach the ears of all interested parties—the Trades Union Joint Negotiating Council as well as the board of British Airways? Surely the hon. Gentleman's Department has the wherewithal to do that.

Mr. Tebbit: The hon. Gentleman must know that what infuriates hon.

Members more than anything is to read in the newspapers information that is to be given to the House later in the day or even the following day by the Secretary of State. The measures taken were designed to ensure that the statement would remain confidential until it was made. That was the first consideration. I do not know who the hon. Gentleman believes that he was responsible to as a Minister, but I am not responsible to the trade union movement or to the CBI. I am responsible to this place.
From that moment on it was made clear to the trade unions that we wanted to consult them. The door was open, No one came in. We should have been glad to have listened to the trade unions' worries about these matters. They chose not to see us. I expected the trade unions to be far more interested in the constitution of a company that is intended to be their employer than in the appointed day. I therefore took the trouble to send them a copy of the draft memorandum and articles of association last March. I asked for their comments. They asked for more copies so that they could give the matter proper consideration. I sent them. I have still not heard their views. I do not complain of that. It is up to the trade unions whether they want to talk to me about these matters, but it is utterly unjust for the hon. Gentleman to accuse me of a lack of willingness to consult them, when the letters that I write are not even answered and they do not tell me what they feel about the matter on which they say that they wish to consult. Am I supposed to kick in the door of the trade union office, grab an official, hold him up against the wall and insist that he tells me what he thinks or politely wait for a letter? I chose to wait politely, but letter came there none. The lack of consultation has been on the part of the trade unions.

Mr. Sheerman: The backdrop to the Bill is a Government who came to power adamantly ignoring trade unions at every level—

Mr. Bowen Wells: Nonsense.

Mr. Sheerman: —and a Prime Minister who showed in every act and gesture a contempt for trade unionists. It is therefore not surprising that the Bill was born


in an atmosphere of dislike and contempt, and that the Minister received no answer. That is what the Government deserve. I do not blame the Minister. The fault lies with what his Government did to turn industrial relations into warfare instead of co-operation.

Mr. Bowen Wells: Nonsense.

Mr. Tebbit: The fact that the hon. Gentleman refers to this Government turning industrial relations into warfare shows that he does not remember what happened between Christmas 1978 and March 1979. That was warfare—the dead left unburied, hospitals closed and the sick left to sit in the snowdrifts waiting for an ambulance. What was that if it was not industrial warfare conducted by the Labour Government and the trade unions? Since I have held my present post, I have made the offer time and again to trade unions that they can discuss these matters with me. It is not me indulging in warfare if they do not choose to come.
I repeat that I am not responsible to the TUC or the CBI—

It being Ten o'clock, the debate stood adjourned.

Ordered,
That, at this day's Sitting, the Civil Aviation Bill may be poceeded with, though opposed, until any hour.—[Mr. Newton.]

Question again proposed, That the amendment be made.

Mr. Tebbit: I am responsible to the House. It comes first. I consult this place before I consult the TUC or the CBI. That is the essence of the matter.
I took the trouble to send the draft memorandum and articles of association to the trade unions in March and they took the trouble to ask me for more copies so that they could consult their members and, I had hoped, so that they could let me know whether they felt that there were matters in those documents that ought to be changed. I have not heard a word from them. Is that warfare on my part? Where is the hostility? Where is the unwillingness to consult? It is not in my office.

Mr. Clinton Davis: The Minister will recall that he had to be virtually dragged kicking and screaming into the produc-

tion of the memorandum and the articles of association. Initially, he refused to disclose them and only later did he change his mind.
The Government were embarking on a radical change of policy. A new concept was being developed. Why was it not possible for the hon. Gentleman to produce a Green Paper or a White Paper so that positive discussions could take place? Was speed so much an essence of the matter?

Mr. Tebbit: The essence of the matter is that the Government were elected on a clear understanding with the electorate.

Mr. Sheerman: No.

Mr. Tebbit: If the hon. Gentleman will wait until I have finished the sentence, he may know whether he agrees or disagrees with it. If he insists on behaving like a Pavlovian dog we shall not get far.

Mr. Sheerman: Like a latter-day Norman Tebbit perhaps?

Mr. Tebbit: The hon. Gentleman can choose his own expressions. The Government were elected on a clear understanding with the electorate that our programme would be to reduce the size of the public sector. The Bill is part of that operation. It can come as no surprise to anyone that we are taking measures to reduce the size of the public sector and that British Airways is one of the prime areas where we can do that. There was no call for a White Paper, a Green Paper, a brown, blue or striped paper. My right hon. Friend the Secretary of State told the House the Government's intentions. From that moment on, we were willing to discuss their implementation with those concerned.

Mr. Woolmer: If, within two months or so of the general election, the proposal to denationalise British Airways was no surprise, why had the Government not done the electorate the courtesy of putting it in their manifesto? If it was so clear to the hon. Gentleman and his colleagues that they intended to denationalise British Airways, why did they not spell that out in the manifesto?

Mr. Tebbit: We thought that a reference to a reduction in the size of the public sector made plain that we would go in for denationalisation. Whatever the


hon. Gentleman thought, it came as no surprise to the rest of the electorate that British Airways was included in our plans. I hope that before long we shall be able to produce some more ideas to please the hon. Gentleman, even if they were not specifically mentioned in our election manifesto.
I do not want to prolong the debate at this time of night. I have made plain that, for me, consultation about all matters concerning the Bill is the order of the day. It was all the way through.
The hon. Member for Hackney, Central said that he had had to drag the memorandum and articles of association out of me. The only point about which we had any great difference was whether they should be subject to debate in the Committee and whether I could produce them before the Committee had finished its proceedings. I gave the undertaking that I would do my best, and I lived up to that undertaking. I think that that is a reasonable source of satisfaction to the hon. Gentleman.
The memorandum and articles were made available to the trade unions in March, and we are now virtually into July. There was ample time for them to respond if the unions wanted to consult me about them. I can only conclude that, for reasons that satisfy them, and are nothing to do with me, the unions have decided that they do not wish to indulge in the consultation that the hon. Gentleman is pressing upon me.

Mr. Clinton Davis: It is a travesty of an accurate record of what happened in the Committee for the Minister to give the impression that he was initially amenable to the idea of the memorandum and articles being provided. The record is absolutely plain, and the hon. Gentleman can consult it. He will see, and other members of the Committee will be able to vouchsafe, that initially he was opposed to the idea and gradually responded to the force of the argument. That is what he said. As a consequence, we were privileged to be provided with the draft memorandum and articles.
For the most part tonight the Minister has been very fair. I do not think that he has been very fair on this matter, but we should be warned by Proverbs that
When he speaketh fair, believe him not: for there are seven abominations in his heart.

It is the Secretary of State who must take the real responsibility, not the Under-Secretary. The right hon. Gentleman failed in his duty, when he was embarking upon a fundamental change of policy, to engage in consultations. Some of the propositions that the Minister has advanced tonight have been utterly absurd. He went so far as to say that the public must have realised, because of the Conservatives' statement that they would reduce the public sector borrowing requirement, that they were going about this policy of privatisation of British Airways. That is absolute rubbish. On that basis, why did the Conservatives in their election manifesto mention anything at all about denationalisation, or privatisation, as they did?

Mr. Tebbit: I said nothing about what we are doing being part of reducing the public sector borrowing requirement. I said that it was made plain that we would reduce the size of the public sector. Therefore, the fact that not everything was included in the manifesto did not exclude it.

Mr. Davis: But the Conservatives were absolutely specific about a number of industries. They were not at all specific about British Airways. They were not mentioned. Yet a matter of four, five or six weeks later—the Government must have known about the policy even before then, I suppose—they chose to announce it in the way that they did. It was an affront to the way in which they should be conducting the job of trying to imbue some confidence in an industry that is going through a very anxious time.
The Government's constitutional reasons did not appear with regard to the Companies Bill or a large number of other matters, matters concerned with the hon. Gentleman's own Department, where the Government consulted before introducing radical changes. The Minister's argument is totally bogus—as Sam Goldwyn said, genuinely bogus. If that was the obstacle, all they needed to have done was to introduce a White Paper. There could have been a Green Paper. If, however, the Government had wanted to state their policy, a White Paper would have enabled people to discuss matters gainfully with them before the Bill was introduced.

Mr. Tebbit: What would have been the difference between publishing a White Paper and making a statement, as the Secretary of State did, on 20 July? I do not see that it would have made a difference. If we had published a White Paper, the hon. Gentleman would have said that we should have consulted everyone before writing it.

Mr. Davis: It would have been possible for the trade unions to have brought to bear on the Government, before they were totally committed to the Bill, their feelings about where they thought the Government were going wrong. The trade unions believe that the Government have gone wrong. We have already had a number of debates that make clear that events will indicate that the Government have misjudged the situation. The atmosphere in which the Government initially published their proposals has changed. The airlines are going through a difficult time. It is difficult to see how the Government can genuinely pursue this policy over the next two or three years unless they intend to sell off public assets at an appalling loss.
The Minister has said not one word of contrition for his behaviour. That is a pity. The Minister could have been bigger and said "I think, on reflection, that the trade unions might have been wrong and might have misjudged the situation." It is not good enough to react by saying that he sent the unions the memorandum and the articles of association. The memorandum and the articles of association have been expertly drawn. The solicitors who undertook the job have justified their fee. I hope that the Minister will not challenge the matter before the Law Society. The solicitors have done a good job. That is not the answer.
The Minister should not simply be saying to the trade unions that his door is open and that he will receive the unions if they care to call. The hon. Gentleman should be saying "I want to discuss matters of policy not only with the trade unions but with other people concerned in the aviation business". I do not consider that the situation that prevails today, in terms of accessibility to the Minister in the belief that the Minister will listen, is remotely like that which existed during the five years in which I held office under a number of Secetaries of State.

Mr. Patrick Cormack: Very modest.

Mr. Davis: I do not accept responsibility, because the direction is given by the Secretary of State. I am not claiming responsibility, but it was a better atmosphere. If a Government indicate that they are prepared to listen, they will gain respect from everyone in the industry. I do not believe that the present Government have gone out to get that respect. I do not believe that they have earned it.

Question put and negatived.

Schedule 1

EFFECT OF SECTION 2 IN CERTAIN CASES

Mr. Tebbit: I beg to move amendment No. 53, in page 23, line 34, leave out 'by virtue of section 2 of this Act'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 62.

Mr. Tebbit: I think that we now come into calmer waters. This amendment relates to matters concerning pensions and contracts of employment. One has to consider with care what one is doing. I assure the House that there is nothing Machiavellian in the amendments before the House. I am not sure whether that assurance helps or damages my case. I assure the House that there is no change of policy and no worsening of the interests of employees regarding contracts of employment or pensions. The effect is to extend the application of paragraph 2 of schedule 1 to reflect fully the circumstances in which there are pension rights.
The amendments are necessary because we found a discrepancy between paragraph 2(3)(a) and paragraph 2(3)(b) which deal respectively with reckonable service for pension purposes in the case of employees of the British Airways Board and employees of the board's wholly owned subsidiaries. We found that paragraph 2(3)(a) as drafted was drawn too narrowly.
10.15 p.m.
The intention is that previous service with the British Airways Board, including that with its predecessors, BOAC and BEA, and with its wholly owned subsidiaries, should be treated for the purposes of any relevant pension arrangements as employment by the successor


company or a wholly owned subsidiary of the successor company. This includes both continuous employment and where a person is re-employed after a break of employment.
The intention is achieved satisfactorily for present and past employees of the wholly owned subsidiaries by paragraph 2(3)(b). But, as drafted, paragraph 2(3)(a), which deals with employees of the mainstream organisation, would only have the desired effects for those employees of the British Airways Board who became employees of the successor company on the appointed day by virtue of clause 2. In other words, it would apply only to those with continuity of employment between the board and the successor company and not to those who left the employment of the board before the appointed day and were re-employed by the successor company after the appointed day. We do not intend that there should be different treatment in this respect.

The amendment to delete
by virtue of section 2 of this Act
rectifies the situation by bringing paragraph 2(3)(a) into line with paragraph 2(3)(b) and treating previous periods of employment with BOAC, BEA or the British Airways Board as reckonable whether or not the employment was continuous.

I should perhaps add that the provisions of paragraph 3 are declaratory for the avoidance of doubt and, as amended, will properly reflect the relevant provisions of the airways pension scheme.

(1) The powers of the British Airports Authority under section 2 of the Airports Authority Act 1975 (which sets out the Authority's functions) shall include power (whether alone or in association with other persons)—


5
(a) to provide or assume the management of any aerodrome outside Great Britain; and


(b) to provide services or facilities which are in the Authority's opinion necessary or desirable for the operation of aerodromes outside Great Britain; but its duty under subsection (8) of that section shall not apply in relation to the management and administration of any aerodrome outside Great Britain.


10
(2) The Authority shall not, by virtue of subsection (1) above, exercise any power to provide or assume the management of any aerodrome or to provide services or facilities except—



(a) with the consent in writing of the Secretary of State; and


15
(b) if the exercise of that power involves capital expenditure by the Authority, or the guaranteeing by the Authority of any liability, with the consent of the Secretary of State given with the approval of the Treasury.



This subsection does not affect the power of the Authority to provide services by virtue of subsection (5) of section 2 (provision of technical advice or assistance, including research services, as respects any matter in which the Authority has skill


20
or experience), notwithstanding that the services also fall within subsection (1)(b) above.



(3) It is hereby declared that—


25
(a) the power of the Authority under subsection (5) of section 2 includes power to provide the advice or assistance there mentioned for any person outside Great Britain; and

Once this amendment has been made, subparagraph (4) becomes redundant, if that is not an inappropriate word in this context. If it were not deleted it would contradict the wider interpretation of subparagraph (3). So the second of this pair of amendments is consequential.

I repeat that neither of the amendments adversely affects in any way the pension arrangements or contracts of employment of employees of the British Airways Board or its wholly owned subsidiaries. Those obligations will be vested in the successor company and its wholly owned subsidiaries by virtue of clause 2. The only change will be with the name of the employer.

I think that these amendments will clear up some posible problems which might have arisen had they not been made.

Amendment agreed to.

Amendment made: No. 62, in page 23, leave out lines 41 to 46.—[Mr. Tebbit.]

Mr. Tebbit: I beg to move.
That consideration of new clauses 3, 4, 15 and 18 be postponed until after the consideration of new clauses 2 and 1.
I understand that this will be for the convenience of the House.

Question put and agreed to.

New Clause 8

EXTENSION OF POWERS OF BRITISH AIR PORTS AUTHORITY

30
(b) the Authority may exercise any of its powers under that section in relation to aerodromes or persons outside Great Britain through a body corporate in which it has a direct or indirect financial interest; and accordingly references in subsection (2)(b) above to the Authority include references to any such body.



(4) Any consent under this section may be given subject to such conditions as the Secretary of State thinks fit.



(5) References in the Airports Authority Act 1975 to aerodromes owned or managed by the Authority shall not apply to aerodromes outside Great Britain.'.—[Mr. Tebbit.]

Brought up and read the First time.

Mr. Tebbit: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to consider the following amendments to the proposed new clause.

(a), in line 10, leave out subsection (2).

(c), leave out line 13.

(d), in line 15, after 'liability', insert
'in excess of limits which shall be prescribed by order made by statutory instrument'.

(e), in line 16, at end insert—
'(c) the statutory instrument referred to in paraghaph (b) of this subsection shall prescribe limits in respect of capital expenditure and the guaranteeing of liability respectively by the Authority which shall be consistent with the Authority's commercial requirements; and such statutory instrument shall be subject to annulment in pursuance of a resolution of either House of Parliament;
(d) The Secretary of State shall at least annually, and more frequently if necessary, review the limits referred to in paragraph (c) of this subsection and if he deems this to be necessary he may vary the same by order made by statutory instrument which shall be subject to annulment as aforesaid.'.

(b), in line 31, leave out subsection (4).

Mr. Tebbit: The clause gives the British Airports Authority greater powers to engage in work overseas. It clarifies its existing powers to operate overseas in certain other respects. The authority's primary function is, of course, to run airports in Great Britain and what is now proposed will in no way prejudice this duty.
It is the Government's policy that nationalised industries generally should support export efforts in their specialised fields. The authority already has power to provide technical advice or assistance to any person, which enabled it to act as a consultant in the export market. However, it is generally believed that the authority's considerable world-wide reputation in the planning, development and operation of airports could be developed more effectively in a way that would sup-

port United Kingdom private sector firms if the authority had somewhat wider powers. It has often been suggested that overseas demand over the next five years could amount to contracts worth as much as £3,000 million for the construction of new airports.
First, therefore, it is proposed in subsection (1)(a) that the authority should be able to provide any aerodrome outside Great Britain or to assume the management of any already established aerodrome. With respect to the provision of an aerodrome, it is common practice, when major airport development projects arise, for consortia to be formed which bring together all the necessary skills. The authority may already provide these consortia with technical advice and assistance but it may not, at present, join them as a full member. The sums of money involved in airport projects are often very large and the developments usually have a high prestige value.
As a result clients—invariably Governments or public authorities—often look for some sign of Government backing of consortia bidding for their contracts. The BAA as a nationalised industry is not, of course, part of Government but it is considered that its involvement as a main contract signatory would provide clients with a sufficient indication of official support. This could make the difference between losing and winning extremely valuable contracts, and this is one of the reasons that the new power is proposed.
With respect to the authority assuming the management of an aerodrome outside Great Britain, subsection (1)(a) will enable the authority to pursue alone or with other bodies development contracts in countries which do not have the experienced manpower resources to run major airports. This kind of support can sometimes be made available under the authority's existing powers to provide advice and assistance, but as a result of this amendment a United Kingdom consortium will now be able to offer package deals including all stages of


planning, design, construction, the provision of equipment and the management of airports once completed.
I turn now to subsection (1)(b). This will enable the authority to provide services which are necessary or desirable for the operation of airports overseas. The authority's existing powers do not permit it to do this. Here again I cite the importance of the authority being able to join consortia as a full member and the need to allow our nationalised industries profitably to market their specialised capabilities.
In general I should like to add that the authority will not undertake major airport construction or the provision of equipment itself. Rather it will normally make its skills and experience available within consortia. Where clients require a particularly high level of official commitment, the authority may, through a wholly owned subsidiary, act as a main contractor, sub-contracting specific tasks as appropriate. However, such cases are likely to be rare; normally the authority will act as a co-signatory to the main contract. It will also be possible for the authority to use its new powers to manage airports and to compete for contracts confined to that function.
The operation by the authority of its new powers will be subject to the consent of the Secretary of State. The authority may occasionally wish to sign small contracts and, in order to ensure that the authority can react quickly to these commercial opportunities, in addition to any specific consents which may be given a general consent will be given by the Secretary of State to permit the authority to take on contracts up to agreed amounts without specific reference to the Secretary of State.
The amounts concerned have been agreed with the authority, but the precise legal form of consent has still to be finalised. There will be a number of safeguards. It is our intention that the authority should report annually to the Secretary of State giving an account and the overall results of its overseas activities. A summary of this report should be published by the authority as part of its annual report and accounts and an overall limit should be set to the unsecured financial liabilities which the authority may assume in exercising its new powers.

Mr. Onslow: I understand that the limits involve formal guidelines. Do the Government intend to put a copy of the guidelines in the Library or to make them available to the House in some other convenient way?

Mr. Tebbit: Yes. I should have liked to make the guidelines available to the House by putting them in the Library this evening. However, the final difficulty of tidying up has to be resolved. We found that the expression "guidelines" does not accord with legislation, which refers to "consent". Such legal matters cause difficulties. I prefer not to put anything in the Library until everything has been firmly and properly tied up.
The Government have been guided by the recommendations of the Overseas Projects Board, which felt that the extension of the authority's powers would strengthen the United Kingdom's export capability in the airports sector. The view of the trade organisations with a major interest in airports—the Export Group for the Constructional Industries, the Society of British Aerospace Companies Limited and the British Consultants Bureau—have been sought. It is clear that there is a general view in industry that the measures are desirable.
There is a strong feeling that the authority should not use its new powers to impinge upon the interests of the private sector. I stress that the intention is that the authority will seek to arrange its overseas business under the new powers to increase the amount of such work obtained by firms in the private sector by more than would be the case without the authority's participation. The clause will enable the authority to act in support of the private sector so as to increase the share of important export projects that might go to British firms.
The hon. Member for Hackney, Central (Mr. Davis) thought of introducing a similar clause in past legislation. With the then Government's precarious majority, the Minister was not willing to introduce a clause which might be controversial. At that time my right hon. Friends and I were not able to give a positive assurance that we could give such a clause a fair wind. We have considered the matter carefully and we have decided that it is right, with the


safeguards that I have mentioned, to proceed in this way. That marks a non-doctrinal attitude by the Government.

Mr. Clinton Davis: The House will be grateful to the Minister for spelling out the purpose of the new clause. He acknowledges that our intention was to introduce a similar provision in 1978. He acknowledges that the Opposition thought that such a clause could be controversial and did not want it to be introduced. We were considering a non-contentious Bill and the Government felt obliged not to proceed with it.

Mr. Tebbit: The problem was that curiously, as on this occasion, the proposal came up rather late and left us with too little time to consult the relevant interests before making a decision.

Mr. Davis: That is a fair point. There was also a feeling that the public sector was acquiring an excessive amount of power. However, that is history.
In broad terms, we welcome the new clause. It recognises the prize that is to be won in exports by the British Airports Authority. The figure of £3,500 million over the next five years is one which makes the clause obviously necessary.
10.30 pm
The Minister has also recognised the enterprise and ability of the BAA, which is an outstandingly good example of public ownership, and its enterprise in being able to enter into consortia and win prizes such as those that he and I have described. The BAA entered into a venture with a company in which British Airways has the entirety of voting shares—it is called IAL—as long ago as 1977. That joint venture was called British Airports International Limited. It is designed to maximise the airport consultancy capability to which the Minister referred. BAL has been doing well. It operates completely commercially and it has vast potential.
Our complaint about the provisions that the Minister has introduced is that they are subject to constraints that I do not believe are imposed elsewhere. The Minister will correct me if I am wrong. A number of other nationalised enterprises operate overseas consultancy services—British Rail, the National Coal Board, IAL, to which I referred, and

British Steel. As far as I know, there are no similar limitations to those set out in subsection (2) of the new clause affecting the enterprises of those concerns.
In the Airports Authority Act 1975, section 3(2) states
The Authority, in framing and carrying out proposals involving substantial outlay on capital account, shall act on lines settled from time to time with the approval of the Secretary of State.
Why was it not possible simply to invoke that subsection in this case? The new clause provides that the Minister shall establish some guideline, general consent, guidance or whatever he will call it. Does that have the force of law? Will it satisfy a customer? Does it carry any weight in law?

Mr. Tebbit: The clause that we are discussing is what carries weight in law. The consent that will be given to the authority is merely framed as guidelines in essence, and sets out the amounts up to which the authority may engage in contracts without reference to the Secretary of State. After reference to the Secretary of State, the consent for a particular contract can be enlarged.

Mr. Davis: It would have been far better and far clearer if the Minister had chosen to embark on this matter along the lines we have suggested in our amendments. The Minister has, perfectly properly, not dealt with the amendments in advance of their being moved. Initially we thought that it would be better to leave out the necessity for all consent, and then on reflection we felt that amendments (c), (d) and (e) were preferable. These would require the Secretary of State to prescribe limits within which the BAA, acting jointly or separately, might operate without such consents as are prescribed. That would require some degree of parliamentary accountability. In the circumstances, it is not unreasonable that Parliament should see what the limits are. I am prepared to invite my hon. Friends not to divide on the issue if the Under-Secretary can satisfy us that the protections that we have introduced in our amendments are the wrong route to follow.
We are deeply concerned that, as drawn, the subsection would appear to provide—if the Minister had not intervened—that the authority could not exercise any powers or engage in any


expenses without the authority of the Minister. That would be a thoroughly impossible position for it to act under, bearing in mind the urgency of dealing with a number of the contracts. That is why we tabled the amendments. It might be better if I sat down and gave the Minister an opportunity to respond. I hope that he will be able to respond favourably.

Mr. McCrindle: Before the Minister replies, I should like to support the new clause. It relates to extending the powers of the British Airports Authority, especially in future overseas activities. I heartily approve of that extension. I approve of any move to encourage the BAA towards a greater degree of commercialism. So far, so good. But there are two points to which I wish to draw my hon. Friend's attention. I give an advance warning that I am looking beyond this new clause to the way airports are organised in future.
The Minister said that the new clause allows the BAA to move into areas overseas in support of the private sector. He will not need me to remind him that we are discussing a Bill that introduces an element of private capital into British Airways. I wonder whether, like me, he feels that that leads him to question whether there is a case either for introducing an element of private capital into the BAA at some time in the not too distant future, or even for demerging the BAA altogether. The authors of a recent report looked to the time when a demerging of the BAA might take place, and when private companies might be floated under the names of Heathrow Limited or Gatwick Limited. That may seem a flight of fancy to some hon. Members—I do not expect my hon. Friend to reply to that point in detail—but the House would have to agree that, properly run, Heathdow and Gatwick could become extremely profitable enterprises.
I hope that by agreeing to the new clause, extending as we should the power and authority of the BAA to engage in overseas enterprises, we shall not close the door to the possible future flotation of companies to run our principal airports. That would have the effect of moving the BAA out of the public sector borrowing requirement, which must appeal to my hon. Friend and other Ministers. There is no inherent reason

why our principal airports should be in public ownership. The possibility of moving them out of public ownership should be attractive to the Government. That would not necessarily mean that we would open our leading airports only to private capital involvement. Local authorities could bid for some of the airports presently under the control of the BAA. I do not need to remind the House that there are some municipal airports which are extremely well run and extremely profitable. Luton, Manchester and Southend are examples of ways in which the local authorities may choose to bid.
Before any of that can happen, we shall have to move towards introducing an element of demerging the BAA. If that were to be the case, I would respectfully suggest that a much greater involvement by British Airways in Heathrow Limited and of British Caledonian in Gatwick Limited might lead to the running of those airports being more inclined to take into account the feelings of the principal users, in the shape of the airlines.

Mr. Alan Clark: Does my hon. Friend think that the changes he is suggesting would lead to the airports being better policed?

Mr. McCrindle: I should have thought that it would be up to Heathrow Limited and Gatwick Limited to make their own security arrangements. If there were to be public pressure for a greater degree of policing—I think that that is what my hon. Friend is implying—they would be more likely to be receptive than the British Airports Authority would be.
I am happy to see the British Airports Authority expertise developed abroad. I am happy at the prospect of British Airports Authority profitability being improved. But I hope the Minister will at the very least reassure me that by agreeing to the new clause we shall not eliminate another solution later to the airports problem along the lines that I have suggested tonight.

Mr. Onslow: Since what my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) has just said was apparently in order, Mr. Deputy Speaker, may I say that it gives me considerable pleasure to agree with him? It is about


time we had another look at the financial structure of the British Airports Authority and considered enabling it to go to different places for its finance.
The right hon. Member for Lanarkshire, North (Mr. Smith), who is getting short tempered, will surely know how much general anger there is about the way in which at the moment the British Airports Authority is obliged to fund the building of new airports by charging existing passengers. I am sure that the House, and I believe the Minister, would welcome a great deal of change in this area which would make it possible to raise capital in a more proper way rather than loading it on revenue.
I was grateful to my hon. Friend the Under-Secretary for what he said about the consultations or discussions which had taken place with the British Consultants Bureau and others. I know that they welcome the exchange of views that they have been able to have with his officials, and which are reflected in the latest draft of what I would call the guidelines, because I do not know what else to call them.
I have in particular been advised by one person who has taken part in some of those discussions that the British Consultants Bureau is happier with the wording which now applies to the object of the extended powers, which is to gain an improvement in the total facilities which consultants, contractors and suppliers in the private and public sectors together are able to offer for overseas project work.
It is that collaboration which should be emphasised, and I hope that the Minister will stress that there is no intention here of giving the British Airports Authority an open, general licence to divert its energies from its priority task, which is to make a good job of running airports in this country by engaging in ambitious foreign ventures which are a diversion of its resources and its attention.
The Minister should be able to assure us that when he comes to consider an application for exemption from the limits set out he will consult not merely the British Airports Authority but others who might be affected—the consultants, contractors, suppliers and so on—if the

exemption were granted. I should like to have his assurance that that is not ruled out.
It is slightly unusual to see in legislation the words
It is hereby declared that
which appear in subsection (3). I have a suspicion that those words are generally used in order to legitimise something that has been of very suspect legitimacy hitherto. I believe that in this case the purpose of the words is to legitimise the activities of British Airports International, for which there may be a somewhat doubtful foundation in law as it stands at the moment. I am all in favour of legitimising even the offspring of nationalised industries, but I should like to be certain that the motives for so doing are as legitimate as the organisation itself.
My hon. Friend will know that there is more than one view about the activity of British Airports International. The hon. Member for Hackney, Central (Mr. Davis) praised it for its being competitive in its marketing activities. I believe that some consultants who are active in this field regard it as aggressive and think that some of the methods that it uses are not wholly fair, particularly in the way in which it has been thought to suggest that it has some special cachet which is denied to private consultants.
It is true that British Airports International draws on staff whose primary function is to do other work. Neither IAL nor the BAA, presumably, employs staff in order to be constantly available for consultancy work overseas. So, to an extent, if they find themselves engaged in that, they do not have a total commitment to it nor necessarily total experience in the field concerned.
So long as the Minister can tell us that he sees British Airports International as having a supporting role and not a role to try to beat competition from the private sector as its primary objective, I can go along with what is sought in the subsection. But if it is to divert the efforts of people whose primary functions are to serve the airport industry in this country into overseas endeavours, I am less than happy that the amendment should be passed.

Mr. Tebbit: First, I say to my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) that this clause would not preclude any introduction of private sector finance to the BAA, although finding a way in which that could be conveniently done bristles with problems.
To my hon. Friend the Member for Woking (Mr. Onslow) I say that this is not an open general licence. It has specifically been drawn to avoid that. Its purpose is not to enlarge the activities of the BAA overseas. It is not to compete with the private sector, to undermine it, or anything other than to support the activities of what one would broadly call Great Britain Limited in securing more of this type of contract. There is no doubt that in many parts of the world it is an advantage to the British industry if this particular part of the public sector is able to go in as a full partner. That is what we intend to do.
Of course, it is possible to lose money just as well as to make money in these activities. One can lose a great deal of money particularly if one is a member of a consortium in which the possible liabilities are to be held on a joint and several basis, and being a public sector animal one is the only member of the consortium that cannot go into liquidation if things get really nasty. Therefore, it is entirely appropriate that the Secretary of State should have some degree of control over the extent to which liabilities could arise from which the authority would be unable to escape through the medium of going into liquidation whilst others could escape from them.
My hon. Friend is also right in what he says about subsection (3)(a). Its purpose is to place beyond doubt the existing power to provide advice or assistance overseas. At present this rests on section 2(5) of the Airports Authority Act 1975, which allows the advice or assistance to be provided to "any person", the latter words being taken to include any persons overseas. This is just a provision to remove doubt.
I should like to deal with the point raised by the hon. Member for Hackney, Central (Mr. Davis). I detect that the House would not want me to deal with it at great length at this time of night.

The reason why I would not recommend the House to accept his amendments is that in general they would remove any effective control by the Secretary of State in these areas. Perhaps it would help the hon. Gentleman if I said that what we had in mind was that there should be immediately consent on a general basis for the authority to assume the management of any overseas aerodrome in cases in which the scope of the services to be provided is such that the management fees payable to the authority do not exceed £1 million a year or £3 million over the duration of the contract.
A specific consent would be required for any new contract which will cause the total management fees payable to the authority to exceed £5 million at any time. It is proposed to give consent for the authority to provide services and facilities in connection with the operation of overseas aerodromes so long as the total unsecured liabilities of the authority under any one contract do not exceed £5 million. A specific consent would be required for any contract which would cause the total amount of the authority's unsecured liabilities under such contracts to exceed £15 million.
The consents will not authorise capital expenditure or the giving of guarantees or the provision by the authority of funds to any person or body other than for day-to-day provision of the services in question. Anything of that kind would require a specific consent.
In general, the requirements would be for the authority to seek to earn a reasonable rate of return on any of the activities; to secure so far as possible any liabilities likely to be incurred; to notify the Secretary of State should the total unsecured liabilities on overseas activities seem likely to exceed £100 million, which would be the overall limit for activities of this kind; to provide these services only through British Airports International Limited, or some other company established or acquired for the purpose, in which the authority owns not less than 50 per cent. of the ordinary share capital; to make an annual report on the activities and publish a summary of that in the authority's annual report, to be laid before Parliament; to keep the Secretary of State informed generally of developments in the field during the year; and to notify the Secretary of State if


any contract seems likely to result in a loss.
That is an outline of the main conditions and the full conditions will be set out in the formal document giving the Secretary of State's consent. I should say that all parties, including the British Airports Authority, seem to be quite happy that this will give the required powers within the overall legislation for it to act effectively in this field.

Mr. Clinton Davis: We believe that the constraints that are imposed are unrea-

sonable in the circumstances. The Minister has not dealt with subsection (2)(a). We shall therefore press our amendment to a Division.

Question put and agreed to.

Clause read a Second time.

Amendment (c) proposed to the proposed clause, leave out line 13.—[Mr. John Smith.]

Question put, That the Amendment be made to the proposed clause:—

The House divided: Ayes 232, Noes 296.

Division No. 380]
AYES
[10.52 pm


Abse, Leo
Eadie, Alex
Lewis, Ron (Carlisle)


Adams, Allen
Eastham, Ken
Litherland, Robert


Allaun, Frank
Ellis, Raymond (NE Derbyshire)
Lofthouse, Geoffrey


Anderson, Donald
English, Michael
Lyon, Alexander (York)


Archer, Rt Hon Peter
Ennals, Rt Hon David
Lyons, Edward (Bradford West)


Armstrong, Rt Hon Ernest
Evans, loan (Aberdare)
McCartney, Hugh


Ashley, Rt Hon Jack
Evans, John (Newton)
McDonald, Dr Oonagh


Ashton, Joe
Ewing, Harry
McElhone, Frank


Atkinson, Norman (H'gey, Tott'ham)
Faulds, Andrew
McKay, Allen (Penistone)


Bagier, Gordon A. T.
Field, Frank
McKelvey, William


Barnett, Guy (Greenwich)
Fitch, Alan
MacKenzie, Rt Hon Gregor


Barnett, Rt Hon Joel (Heywood)
Flannery, Martin
Maclennan, Robert


Bennett, Andrew (Stockport N)
Fletcher, Ted (Darlington)
McNally, Thomas


Bidwell, Sydney
Foot, Rt Hon Michael
McWilliam, John


Booth, Rt Hon Albert
Ford, Ben
Magee, Bryan


Boothroyd, Miss Betty
Forrester, John
Marks, Kenneth


Bradley, Tom
Foster, Derek
Marshall, David (Gl'sgow.Shettles'n)


Bray, Dr Jeremy
Fraser, John (Lambeth, Norwood)
Marshall, Jim (Leicester South)


Brown, Hugh D. (Provan)
Freeson, Rt Hon Reginald
Martin, Michael (Gl'gow, Springb'rn)


Brown, Robert C. (Newcastle W)
Garrett, John (Norwich S)
Mason, Rt Hon Roy


Brown, Ron (Edinburgh, Leith)
George, Bruce
Maxton, John


Buchan, Norman
Gilbert, Rt Hon Dr John
Maynard, Miss Joan


Callaghan, Jim (Middleton &amp; P)
Ginsburg, David
Meacher, Michael


Campbell, Ian
Gourlay, Harry
Mellish, Rt Hon Robert


Campbell-Savours, Dale
Graham, Ted
Mikardo, Ian


Canavan, Dennis
Grant, George (Morpeth)
Millan, Rt Hon Bruce


Cant, R. B.
Grant, John (Islington C)
Mitchell, Austin (Grimsby)


Carmichael, Neil
Hamilton, W. W. (Central Fife)
Mitchell, R. C. (Soton, Itcnen)


Carter-Jones, Lewis
Harrison, Rt Hon Walter
Morris, Rt Hon Alfred (Wythenshawe)


Cartwright, John
Hattersley, Rt Hon Roy
Morris, Rt Hon Charles (Openshaw)


Clark, Dr David (South Shields)
Haynes, Frank
Morris, Rt Hon John (Aberavon)


Cocks, Rt Hon Michael (Bristol S)
Healey, Rt Hon Denis
Moyle, Rt Hon Roland


Cohen, Stanley
Heffer, Eric S.
Newens, Stanley


Coleman, Donald
Home Robertson, John
Oakes, Rt Hon Gordon


Concannon, Rt Hon J. D.
Homewood, William
Ogden, Eric


Conlan, Bernard
Hooley, Frank
O'Halloran, Michael


Cowans, Harry
Horam, John
O'Neill, Martin


Craigen, J. M. (Glasgow, Maryhill)
Howell, Rt Hon Denis (B'ham, Sm H)
Orme, Rt Hon Stanley


Crowther, J. S.
Huckfield, Les
Owen, Rt Hon Dr David


Cryer, Bob
Hudson Davies, Gwilym Ednyfed
Palmer, Arthur


Cunliffe, Lawrence
Hughes, Mark (Durham)
Park, George


Cunningham, George (Islington S)
Hughes, Roy (Newport)
Parker, John


Cunningham, Dr John (Whitehaven)
Janner, Hon Greville
Parry, Robert


Davidson, Arthur
Jay, Rt Hon Douglas
Pendry, Tom


Davies, Rt Hon Denzil (Llanelll)
John, Brynmor
Powell, Raymond (Ogmore)


Davies, Ifor (Gower)
Johnson, James (Huli West)
Prescott, John


Davis, Clinton (Hackney Central)
Johnson, Walter (Derby South)
Price, Christopher (Lewisham West)


Davis, Terry (B'rm'ham, Stechford)
Jones, Rt Hon Alec (Rhondda)
Race, Reg


Deakins, Eric
Jones, Barry (East Flint)
Radice, Giles


Dean, Joseph (Leeds West)
Jones, Dan (Burnley)
Rees, Rt Hon Merlyn (Leeds South)


Dempsey, James
Kaufman, Rt Hon Gerald
Richardson, Jo


Dewar, Donald
Kerr, Russell
Roberts, Albert (Normanton)


Dixon, Donald
Kilroy-Silk, Robert
Roberts, Allan (Bootle)


Dobson, Frank
Kinnock, Neil
Roberts, Gwilym (Cannock)


Dormand, Jack
Lambie, David
Robertson, George


Douglas, Dick
Lamborn, Harry
Robinson, Geoffrey (Coventry NW)


Douglas-Mann, Bruce
Lamond, James
Rodgers, Rt Hon William


Dubs, Alfred
Leadbitter, Ted
Rooker, J. W.


Duffy, A. E. P.
Leighton, Ronald
Roper, John


Dunnett, Jack
Lestor, Miss Joan (Eton &amp; Slough)
Ross, Ernest (Dundee West)


Dunwoody, Mrs Gwyneth
Lewis, Arthur (Newham North West)
Rowlands, Ted




Ryman, John
Straw, Jack
White, Frank R. (Bury &amp; Radcliffe)


Sandelson, Neville
Summerskill, Hon Dr Shirley
White, James (Glasgow, Pollok)


Sever, John
Taylor, Mrs Ann (Bolton West)
Whitehead, Phillip


Shearman, Barry
Thomas, Dafydd (Merioneth)
Whitlock, William


Sheldon, Rt Hon Robert (A'ton-u-L)
Thomas, Jeffrey (Abertillery)
Willey, Rt Hon Frederick


Shore, Rt Hon Peter (Step and Pop)
Thomas, Mike (Newcastle East)
Williams, Rt Hon Alan (Swansea W)


Short, Mrs Renée
Thomas, Dr Roger (Carmarthen)
Wilson, William (Coventry SE)


Silkin, Rt Hon John (Deptford)
Thorne, Stan (Preston South)
Winnick, David


Silverman, Julius
Tilley, John
Woodall, Alec


Skinner, Dennis
Tinn, James
Woolmer, Kenneth


Smith, Rt Hon J. (North Lanarkshire)
Torney, Tom
Wrigglesworth, Ian


Soley, Clive
Varley, Rt Hon Eric G.
Wright, Sheila


Spearing, Nigel
Wainwright, Edwin (Dearne Valley)
Young, David (Bolton East)


Spriggs, Leslie
Walker, Rt Hon Harold (Doncaster)



Stallard, A. W.
Walkins, David
TELLERS FOR THE AYES:


Stoddart, David
Weetch, Ken
Mr, James Hamiton and Mr. George Morton.


Stott, Roger
Wellbeloved, James



Strang, Gavin
Welsh, Michael





NOES


Adley, Robert
Dickens, Geoffrey
Howell, Ralph (North Norfolk)


Aitken, Jonathan
Dorrell, Stephen
Howells, Geraint


Alexander, Richard
Dover, Denshore
Hunt, David (Wirral)


Ancram, Michael
du Cann, Rt Hon Edward
Hunt, John (Ravensbourne)


Arnold, Tom
Dunn, Robert (Dartford)
Irving, Charles (Cheltenham)


Aspinwall, Jack
Durant, Tony
Jenkin, Rt Hon Patrick


Atkins, Rt Hon H. (Spelthorne)
Dykes, Hugh
Johnson Smith, Geoffrey


Atkins, Robert (Preston North)
Eden, Rt Hon Sir John
Jopling, Rt Hon Michael


Baker, Kenneth (St. Marylebone)
Edwards, Rt Hon N. (Pembroke)
Kaberry, Sir Donald


Baker, Nicholas (North Dorset)
Eggar, Timothy
Kellett-Bowman, Mrs Elaine


Beaumont-Dark, Anthony
Emery, Peter
Kimball, Marcus


Bell, Sir Ronald
Eyre, Reginald
Kitson, Sir Timothy


Bendall, Vivian
Fairgrieve, Russell
Knox, David


Benyon, Thomas (Abingdon)
Faith, Mrs Sheila
Lamont, Norman


Benyon, W. (Buckingham)
Farr, John
Lang, Ian


Berry, Hon Anthony
Fell, Anthony
Langford-Holt, Sir John


Best, Keith
Fenner, Mrs Peggy
Latham, Michael


Bevan, David Gilroy
Finsberg, Geoffrey
Lawrence, Ivan


Biffen, Rt Hon John
Fisher, Sir Nigel
Lawson, Nigel


Biggs-Davison, John
Fletcher, Alexander (Edinburgh N)
Lee, John


Blackburn, John
Fletcher-Cooke, Charles
Le Marchant, Spencer


Blaker, Peter
Fookes, Miss Janet
Lennox-Boyd, Hon Mark


Body, Richard
Forman, Nigel
Lester, Jim (Beeston)


Bonsor, Sir Nicholas
Fowler, Rt Hon Norman
Lewis, Kenneth (Rutland)


Boscawen, Hon Robert
Fox, Marcus
Lloyd, Ian (Havant &amp; Waterloo)


Bottomley, Peter (Woolwich West)
Fraser, Rt Hon H. (Stafford &amp; St)
Lloyd, Peter (Fareham)


Bowden, Andrew
Fraser, Peter (South Angus)
Loveridge, John


Boyson, Dr Rhodes
Galbraith, Hon T. G. D.
Luce, Richard


Braine, Sir Bernard
Gardiner, George (Reigate)
Lyell, Nicholas


Bright, Graham
Gardner, Edward (South Fylde)
McCrindle, Robert


Brinton, Tim
Garel-Jones, Tristan
Macfarlane, Neil


Brittan, Leon
Glyn, Dr Alan
MacGregor, John


Brocklebank-Fowler, Christopher
Goodhart, Philip
MacKay, John (Argyll)


Brooke, Hon Peter
Goodhew, Victor
Macmillan, Rt Hon M. (Farnham)


Brotherton, Michael
Goodlad, Alastair
McNair-Wilson, Michael (Newbury)


Brown, Michael (Brigg &amp; Sc'thorpe)
Gorst, John
McNair-Wilson, Patrick (New Forest)


Browne, John (Winchester)
Gow, Ian
McQuarrie, Albert


Bruce-Gardyne, John
Gower, Sir Raymond
Madel, David


Bryan, Sir Paul
Gray, Hamish
Major, John


Buchanan-Smith, Hon Alick
Greenway, Harry
Marland, Paul


Buck, Antony
Griffiths, Eldon (Bury St Edmunds)
Marlow, Tony


Budgen, Nick
Griffiths, Peter (Portsmouth N)
Marshall, Michael (Arundel)


Bulmer, Esmond
Grist, Ian
Marten, Neil (Banbury)


Burden, F. A.
Grylls, Michael
Mates, Michael


Butcher, John
Gummer, John Selwyn
Mather, Carol


Butler, Hon Adam
Hamilton, Hon Archie (Eps'm&amp;Ew'll)
Maude, Rt Hon Angus


Cadbury, Jocelyn
Hamilton, Michael (Salisbury)
Mawby, Ray


Carlisle, Kenneth (Lincoln)
Hampson, Dr Keith
Mawhinney, Dr Brian


Chaiker, Mrs Lynda
Hannam, John
Maxwell-Hyslop, Robin


Channon, Paul
Haselhurst, Alan
Mayhew, Patrick


Chapman, Sydney
Havers, Rt Hon Sir Michael
Mellor, David


Churchill, W. S.
Hawksley, Warren
Meyer, Sir Anthony


Clark, Hon Alan (Plymouth, Sutton)
Hayhoe, Barney
Miller, Hal (Bromsgrove &amp; Redditch)


Clark, Sir William (Croydon South)
Heddle, John
Mills, Iain (Meriden)


Clarke, Kenneth (Rushcliffe)
Henderson, Barry
Mills, Peter (West Devon)


Clegg, Sir Walter
Heseltine, Rt Hon Michael
Miscampbell, Norman


Cockeram, Eric
Hicks, Robert
Mitchell, David (Basingstoke)


Cormack, Patrick
Higgins, Rt Hon Terence L.
Moate, Roger


Corrie, John
Hill, James
Monro, Hector


Costain, A. P.
Hogg, Hon Douglas (Grantham)
Montgomery, Fergus


Cranborne, Viscount
Holland, Philip (Carlton)
Moore, John


Critchley, Julian
Hooson, Tom
Morgan, Geraint


Crouch, David
Hordern, Peter
Morris, Michael (Northampton, Sth)


Dean, Paul (North Somerset)
Howell, Rt Hon David (Guildford)
Morrison, Hon Charles (Devizes)







Morrison, Hon Peter (City of Chester)
Roberts, Michael (Cardiff NW)
Thompson, Donald


Mudd, David
Roberts, Wyn (Conway)
Thorne, Neil (Ilford South)


Murphy, Christopher
Rost, Peter
Thornton, Malcolm


Myles, David
Royle, Sir Anthony
Townend, John (Bridlington)


Neale, Gerrard
Sainsbury, Hon Timothy
Townsend, Cyril D. (Bexleyheath)


Needham, Richard
St. John-Stevas, Rt Hon Norman
Trippier, David


Nelson, Anthony
Scott, Nicholas
Trotter, Neville


Neubert, Michael
Shaw, Michael (Scarborough)
van Straubenzee, W. R.


Newton, Tony
Shelton, William (Streatham)
Vaughan, Dr Gerard


Nott, Rt Hon John
Shepherd, Colin (Hereford)
Viggers, Peter


Onslow, Cranley
Shepherd, Richard(Aldridge-Bt'hills)
Waddington, David


Oppenheim, Rt Hon Mrs Sally
Shersby, Michael
Wakeham, John


Page, Rt Hon Sir R. Graham
Silvester, Fred
Waldegrave, Hon William


Page, Richard (SW Hertfordshire)
Sims, Roger
Walker, Bill (Perth &amp; E Perthshire)


Parkinson, Cecil
Skeet, T. H. H.
Walker-Smith, Rt Hon Sir Derek


Parris, Matthew
Speed, Keith
Wall, Patrick


Patten, Christopher (Bath)
Speller, Tony
Waller, Gary


Patten, John (Oxford)
Spence, John
Walters, Dennis


Pattie, Geoffrey
Spicer, Jim (West Dorset)
Ward, John


Pawsey, James
Spicer, Michael (S Worcestershire)
Warren, Kenneth


Penhaligon, David
Sproat, Iain
Watson, John


Percival, Sir Ian
Squire, Robin
Wells, John (Maidstone)


Pollock, Alexander
Stanbrook, Ivor
Wells, Bowen (Hert'rd &amp; Stev'nage)


Porter, George
Stanley, John
Wheeler, John


Price, David (Eastleigh)
Steen, Anthony
Whitelaw, Rt Hon William


Proctor, K. Harvey
Stevens, Martin
Whitney, Raymond


Raison, Timothy
Stewart, Ian (Hitchin)
Wickenden, Keith


Rathbone, Tim
Stewart, John (East Renfrewshire)
Wiggin, Jerry


Rees, Peter (Dover and Deal)
Stokes, John
Williams, Delwyn (Montgomery)


Rees-Davies, W. R.
Stradling Thomas, J.
Winterton, Nicholas


Ronton, Tim
Tapsell, Peter
Wolfson, Mark


Rhodes James, Robert
Taylor, Robert (Croydon NW)
Young, Sir George (Acton)


Rhys Williams, Sir Brandon
Taylor, Teddy (Southend East)



Ridley, Hon Nicholas
Tebbit, Norman
TELLERS FOR THE NOES:


Ridsdale, Julian
Temple-Morris, Peter
Lord James Douglas-Hamilton and Mr. John Cope.


Rifkind, Malcolm
Thomas, Rt Hon Peter (Hendon S)

Question accordingly negatived.

Clause added to the Bill.

New Clause 1

ACQUISITION OF LAND BY AGREEMENT BY BRITISH AIRPORTS AUTHORITY

In section 17 of the Airports Authority Act 1975 (which deals with the acquisition by the British Airports Authority of land and rights over land), the following subsection shall be inserted after subsection (1)—
(1A) Without prejudice to the power of the authority by virtue of section 2(3) of this Act to acquire by agreement any land required for any purpose connected with the discharge of its duties under this Act, the Authority may acquire by agreement any land which in the opinion of the Authority may be required for any such purpose notwithstanding that it is not immediately so required".'."—[Mr. Tebbit.]

Brought up, and read the First time.

Mr. Tebbit: I beg to move, That the clause be read a Second time.
When the Government announced on 17 December their decision to invite the British Airports Authority to bring forward proposals for the development of Stansted airport my right hon. Friend the Secretary of State said that our aim would be that the owners of residential and agricultural property in the wider area which may in future be required for further development should have the opportunity of staying on or of selling their properties

at an unblighted value to the BAA. The proposed clause will make that possible by giving the authority the necessary discretionary powers to acquire land from owners who wish to sell their property.
At present the authority's powers to purchase land are fairly limited. Under section 2(3) of the Airports Authority Act 1975 it has the power to do anything which is calculated to facilitate the discharge of its duties, which has been held to mean, in effect, that it can purchase property on a discretionary basis when it needs to do so for some specific purpose arising from its current airport operations.
The authority also has the power to acquire compulsorily property that is the subject of a compulsory purchase order confirmed by the Secretary of State. It is also possible for it to buy the same property by agreement before the time at which the compulsory purchase has to take place. In either case the owner-occupier receives the full unblighted value of his property in accordance with the statutory blight provisions. That would be the situation at Stansted in respect of the 1,500 acres or so for which a planning application and a compulsory purchase order are to be submitted and which would be required if planning permission is given for the construction of


a new terminal operating at the airport. The statutory blight provisions will be triggered off as soon as the notice of compulsory purchase is published and owner-occupiers will therefore have an immediate remedy if they cannot sell their property at a reasonable price.
However, the BAA has also been invited to define and apply for the safeguarding of an additional area of 2,500 acres, sufficient to provide for a possible second runway and further terminal capacity should that be needed in the more distant future. This will not be the subject at this stage of a planning application or of compulsory purchase orders and will not therefore benefit from the blight provisions. The effect of the new clause will be to enable the BAA to provide relief by acquiring such land by agreement with the owners in advance of requirements. It will not extend the authority's existing compulsory purchase powers.
In essence, it means that for those living in the 2,500 acres, who might not otherwise be able to sell their property, because prospective buyers would have in mind that there could at some time be a further extension of the airport, there will be a relief under which the BAA will be empowered to buy the property from them, if they wish to sell.

Mr. Clinton Davis: Am I right in thinking that no consent by the Minister will be required for the undertaking of what is considerable public expenditure? Does not that contrast with the consents that he is required to give in relation to the previous new clause, which probably involves far less expenditure by the authority at any given time?

Mr. Tebbit: No, I would not say so. I think that the amounts involved would not be enormous compared with the possible contingent liabilities in which the authority might land itself in the event of a commercial venture overseas going wrong.
After all, 2,500 acres, even at £1,000 an acre, cost £2·5 million—if at this time of night I can manage to get the decimals in the right place. The amounts are not extraordinary. Moreover, it is very unlikely that anything like all the property owners in the area will ask the authority to acquire their property under this provision.
The clause will bring the authority's powers into line with those of other public authorities. It closely follows the wording of section 48 of the Town and Country Planning Act 1959, which contains a similar provision in relation to the acquisition by the Minister of Transport of land for highways. Comparable powers are also available to principal local councils under section 120(2) of the Local Government Act 1972, to water authorities under the Water Resources Act 1963, and to the British Railways Board under section 14(1)(c) of the Transport Act 1962.
This will be a general power available at all the authority's airports in the United Kingdom. It will be for the authority itself to decide whether any purchases that it is contemplating at the request of, or with the agreement of, the owners concerned are within the terms of the new powers.
I commend the clause to the House. Its purpose is to mitigate the effect of the inevitable uncertainty about possible further development of Stansted airport if demand continues to grow in the more distant future. It will enable the BAA to purchase property that owners wish to sell in that wider area around the airport in the event that they find difficulty in selling to buyers other than the authority.

Mr. Stanley Newens: The purpose of the clause is essentially to enable the British Airports Authority to acquire land for the expansion of Stansted airport. I accept that it is entirely right that when property is blighted by proposals for such a huge expansion as is envisaged by those proposing the extension of Stansted those who live in and own property within the area should be enabled to sell it at a fair price.
That means that the developer must have the powers to acquire such properties, which would not be readily saleable at the normal market price to other would-be purchasers. I entirely accept that it would be grossly unfair to those living under the shadow of development at Stansted for a number of years to be deprived of the possibility of obtaining fair market value for their property for an indefinite period.
However, the powers granted by the clause are sweeping. They appear to suggest, to some people who are concerned,


that the outcome of the public inquiry is virtually a fait accompli. The Minister shakes his head. I am anxious to give him the opportunity to make it clear that that is not so, and to assure the House on the matter. Can he tell us that in no way does the clause indicate any presumption of approval of the BAA's plans for the expansion of the airport, as suggested by the Government?

Mr. Tebbit: I am happy to give the hon. Gentleman that assurance. I give it to him in two parts. First, the making of the compulsory purchase order on the 1,500 acres does not presume the result of the public inquiry. Most certainly, the giving of power to acquire by agreement within the wider area does not assume anything about the basic public inquiry into the 1,500 acre proposition or to any further safeguarding for the future.

Mr. Newens: I am grateful to the Minister for that clear statement. Many people in that area regard it as a travesty of democracy that, having gone through a long and involved fight ever a number of years a decade ago, they should again be required to take up the cudgels on this issue. It would make a mockery of the public inquiry if, as some people have been inclined to suggest, the decision had already been taken. For this reason, I welcome very much the Minister's statement.
Certain other questions arise. I should like the Minister to address his mind to them. If the British Airports Authority acquires land, who will meet any loss incurred if the proposal to expand Stansted is eventually rejected? If permission for the expansion is not regarded as a foregone conclusion, I would be grateful if the Minister could explain the situation should the expansion not go ahead.
I understand fully what the Minister says about the safeguard for people living in the area of the 1,500 acres. Will the Minister say whether the people living in the area of the further 2,500 acres, who find their property blighted, will be able to claim full market value for their property as would be the case, I understand, if the British Airports Authority sought planning permission for the area, as originally envisaged in the Secretary of State's statement on 17 December?

Some of us understood that the British Airports Authority would apply for outline planning permission for the 2,500 acres in addition to the 1,500 acres. It would be helpful if the Minister could explain what has happened on the issue. If the people living in the area of the 2,500 acres feel that they will not receive full market value for their property, this area could suffer from some other effects of blight.
Many farmers and residents who experienced difficulty getting full market value for their land might also take the view that it was not desirable to invest in their property because they would not get back in full the money so invested. A state of affairs might develop in which the whole area declined and became dilapidated in a number of respects.
I must say frankly that the new clause has added considerably both to the disquiet and resentment felt in the area. As the Minister is no doubt aware, the NFU has already contacted a number of people, expressing concern. The whole sequence of events in Stansted gives rise to a great deal of cynicism on the part of many people living in the area. I should therefore, be grateful if the Minister would address himself, as he has already done to one of my questions, to the other points. His replies will be studied carefully by all those living in West Essex who are concerned about this important problem.

Mr. Alan Haselhurst: I apologise for detaining the House at this hour, but it is not my fault that business has been so arranged that this extremely important item for my constituency—and indeed the nation—has come up as the last item in the business this evening and not the first item of business in a week's time. No hon. Member is more nearly affected by these particular proposals than myself and they are of great importance to my constituency.
The new clause was forecast in an answer given by my hon. Friend the Under-Secretary on 31 March to a question I put down. I was grateful for the fact that the Government acknowledged that there was a case for helping those people whose properties lay in the extra 2,500-acre area which was being reserved for possible future airport development at Stansted should the first proposals pass the test of a public inquiry.
I suppose that one should be careful about being over-grateful for statements that come from Front Benches. I do not mean to be unkind to my hon. Friend, but when one looks at the proposal before us it is perhaps rather different from that which many of us expected.
My right hon. Friend the Secretary of State for Trade said in the House on 17 December that the Government's aim would be that
the owners of residential and agricultural property in this wider area should have the opportunity either of continuing to live or farm there, pending any possible requirement for this additional land, or of selling their property at an unblighted value to the BAA"."—[Official Report, 17 December 1979; Vol. 976, c. 38.]
That raised certain expectations which might not have been completely explicit were it not for the fact that my right hon. Friend, in a letter to the president of the National Farmers Union, who happens to be a distinguished constituent of mine, said that he could only repeat that it remained his intention
that this area should be safeguarded from incompatible development and that those with property within its boundary should have recourse to the remedy of the statutory blight provisions as soon as is practicable.
But when my hon. Friend the Under-Secretary, who is to reply to the debate tonight, answered my question on 31 March he was slightly less specific than that. It then became apparent that the powers which would be conferred on the BAA when a proposal was brought before the House would only be
to acquire by agreement land which may be required for airport development in future, but which is not immediately required for that purpose."—[Official Report, 31 March 1980; Vol. 982, c. 21.]
We did not feel immediately alarmed that there was any deviation from the intention that had been more expressly stated by my right hon. Friend on those previous occasions. But it is now clear that the new clause leaves something to be desired, at least in relation to people's fears about how the BAA will employ its powers. It would be helpful if my hon. Friend could give some reassurance on that tonight.
The new clause goes very wide. Everything seems to be left to the good will of the BAA. It is for its decision whether one house as opposed to another is to be purchased. A case has already been re-

ferred to me concerning contiguous properties where the BAA is prepared, apparently, to buy one but is not prepared to buy the other although the other lies a mere 85 yards outside the boundary of the designated 2,500 acres and in full view of the airport. One is worried about how the BAA will approach this matter.
Disturbing stories are coming through to me. I am getting first hand accounts, though, obviously, one allows for a degree of exaggeration because the people who are telling these stories are directly concerned with the imminent loss of their property. They face the loss of homes which are of great emotional and sentimental value to them and in the case of farmers they are people whose livelihood has depended upon the possession of the property.
Different stories are told, but they cast a worrying light on how the BAA will behave. One hears that the BAA offers tempting sums with the implication, not always too well hidden, that unless the property owner settles now it will be worse later if he has to take a chance when statutory blight provisions may apply. That is a threat. Other stories tell of the BAA offering a less than adequate sum and saying "If you do not accept the price suggested, you must take your chance in the future." If that is the way in which the BAA is behaving in respect of the inner 1,500 acres it is legitimate to have doubts about how it will handle the issue when it is given powers over the 2,500 acres areas.

Mr. Clinton Davis: Has the hon. Gentleman challenged the British Airports Authority? Is he relying on rumour or guesswork?

Mr. Haselhurst: I appreciate the question. I am in the process of checking some of the allegations with the chairman of the BAA. I have referred other cases to the Secretary of State. I have had direct, first hand accounts from constituents which I am investigating. I qualified my remarks by saying that I allowed for people who are emotionally involved exaggerating. I accept the word of my constituents, some of whom I know well. They are not the type of people who would mislead me about such an issue.

Mr. Clinton Davis: Would not it have been better to have checked today with


the BAA before raising the matter in the House?

Mr. Haselhurst: I have not had replies from inquiries which I instigated several days ago with my right hon. Friend and the chairman of the BAA. Tonight we are conferring powers on the BAA and I am entitled to air the worries of my constituents on the Floor of the House. It would be deplorable if I were to be in any way curtailed in so doing. I have tried to do it in the most moderate way possible, allowing for the possibility of an element of exaggeration.
People are entitled to know what the future will hold. There appears to be no recourse for someone who disagrees with the BAA on an assessment of value. If, in 1983–84, unblighted values have to be assessed, the wisdom of Solomon will be needed to achieve a fair deal.
People in my constituency are asking what the BAA is up to, requiring 2,500 acres extra for possible airport development when an airport such as Heathrow is contained within much narrower confines. When they learn that the BAA's intention is to develop sites for car parks and hotels, by taking land now at a not yet determined value, and re-letting that land at a higher price to the people who will build the hotels and car parks, they raise pertinent questions about the confiscation value of their land. That is fair and justified.
We must know more about the level of compensation before we confer powers on the BAA. There should be a requirement in legislation to ensure some type of appeal or recourse to arbitration. Part V of the Land Compensation Act 1973, which deals with the extension of classes of blighted land, might be applied to the 2,500 acre provision to give access to the Land Tribunal.
There is also the Agriculture (Miscellaneous Provisions) Act 1963 which, in section 22, provides allowances for persons displaced from agricultural land, That would give people the right to full disturbance costs. At present, my constituents do not know whether they have any grounds to contest a value put on their property by the BAA and they do not know whether they can safeguard their interests if they once say "No".
11.30 pm
There seems to be no reasonable compensation held out to them. In the earlier statements of my right hon. Friend I had assumed that there was to be parity of treatment for the people in the second stage development area as compared with the first stage development area. I believe that they should be given some kind of safeguard against arbitrary behaviour by the BAA. It may be difficult for people to understand that the BAA will be regarded as being other than kind and munificent. I am sure I love all of the senior executives I have met like brothers. But there is a long history in my constituency of battling away on the Stansted issue. It goes back 20 years.
There is a deep suspicion of civil servants, Ministers and now the BAA. There is the feeling that there has been a ganging up against them, that some people somewhere—it is hard to specify—have always intended that Stansted should be the designated site for a third London airport. Against this background of suspicion, can my hon. Friend wonder that people raise their eyebrows and start to peer at this legislation and say that it is not adequate because it does not give safeguards?
I hope my hon. Friend will understand why the feelings of people are outraged and will not seek to pile insult upon injury, the injury they feel that Stansted has again been chosen despite two previous public inquiries deciding against it. I hope my hon. Friend will do all that he can to ensure that, if people are to be dispossessed of their homes and livelihoods, they are dispossessed on the most honourable, equitable and fully compensated terms.

Sir Derek Walker-Smith: I shall be brief and I shall be aided in that objective by the fact that many pertinent queries have been raised and relevant points made in the two excellent speeches to which we have just listened. I do not intend to repeat the arguments on the general question of the propriety of making Stansted a third London airport, which I was privileged to deploy in some detail in the debate in this House in February.
The hon. Member for Harlow (Mr. Newens), in the course of an informed


and admirable speech, referred to the disquiet and resentment which this new clause arouses in the area which he and I and my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) represent. For myself, in the classical Churchillian phrase in another context, I find no difficulty in confining my enthusiasm for the new clause within the bounds of decorum. It is certainly a curious clause in its drafting and content. The new clause extends the powers for the acquisition of land conferred by the Airports Authority Act 1975. Those powers are already wide, and include powers of compulsory acquisition.
There is no objection to such powers if they are for a proper objective, having regard to the fact that the powers of compulsory acquisition are subject to the proper safeguards of the Acquisition of Land (Authorisation Procedure) Act 1946 and the Compulsory Purchase Act 1965. In the case of compulsory acquisition there are statutory procedures concerning proper compensation and the judicial assessment thereof by the Lands Tribunal, to which my hon. Friend referred as not being available in the case of this clause.
The Minister will correct me if I am wrong, but my recollection is that the reference to the Lands Tribunal is one of the provisions expressly excluded in the 1975 Act to which this new clause is an addition. As to the powers to acquire by agreement, there is nothing to object to in those if the acquisition is for the proper functions of the authority, as statutorily defined. But is it? That is where the doubt and the difficulty come in in respect of the clause. What it does is to empower the authority
to acquire by agreement any land…which in the opinion of the Authority
—not a good phrase to find in any statute—
may be required for any such purpose notwithstanding that it is not immediately required".
What purpose is there referred to? The purpose is any purpose connected with the discharge of the authority's duties under the Airports Authority Act 1975.
To see what those duties are one must go to section 2(1) of the 1975 Act. They are defined as:
to provide at its aerodromes such services and facilities as are necessary".

That is the exent of the duty. Therefore, that is the extent of the power of acquisition. Any attempt to go beyond that might be ultra vires and would be restrained by the courts in their jurisdiction of judicial review.
I ask my hon. Friend the question: how can such a duty exist when there is no aerodrome and may never be an aerodrome? If he looks at the language of the Act and considers it correctly, I think he will find himself ineluctably, and perhaps unwillingly, impelled to that conclusion. Therefore, I say reluctantly that this new clause is at best a dubious exercise of the draftsman's art and may well come unstuck in the courts if legislative effect is given to it.

Mr. Tebbit: I always listen most carefully to what my right hon. and learned Friend says, but do I understand him to be making his point in relation to Stansted? To the best of my belief there is one of the British Airports Authority's aerodromes at Stansted.

Sir D. Walker-Smith: There may be an airport existing there, but the section says
to provide at its aerodromes such services and facilities as are … necessary
to the aerodromes there existing, not to some putative, hypothetical, visionary airport of the future. That is where the difference lies. My hon. Friend must consider that aspect.
After all, this curious power—it is a curious power, however one looks at it—is given for a fairly obvious reason—that is, to strengthen the British Airports Authority's hand in presenting Stansted and its land-take requirements res judicata, as a decision already taken in substance if not in form. It is that which arouses the disquiet and resentment which has been exhibited in the speeches which we have been privileged to hear so far. It is to assist the airports authority in getting the citizen to part with the land necessary for a third London airport which may never come into being and, of course, to spread the impression of its inevitability and, by the acquisition of large areas of land, to strengthen the case for the selection of Stansted as the third London airport on the grounds that there is the site all ready and waiting and equipped and that it should not be wasted.

Mr. Clinton Davis: My understanding was that a number of people who were opposed to Stansted were nevertheless in favour of the provision that the Minister has introduced. Is the right lion and learned Gentleman saying that, since there is to be an inquiry—and it is absurd to say that anyone can pre-empt the result of it—he would rather not have the provision?

Sir D. Walker-Smith: The hon. Gentleman must grow up, if that is not an infelicitous and disrespectful term to use to so experienced a parliamentarian as himself. Obviously if one is able to tell the inquiry that the whole of the land is already in the ownership and occupation of the BAA that will carry great influence. It would need counsel or a solicitor of much less forensic ability than the hon. Gentleman to make that case, to point to the 1,500 acres and the 2,500 acres and ask "If you turn this down, what will happen to all this? Where are the procedures for the authority to disembarrass itself of all this land if the judgment goes the other way?" There are no such procedures. Obviously, to have the larger part of the site in hand at the time of the inquiry would be an immensely persuasive and pre-emptive factor which ought to be avoided.
I fear that this new clause will be used by the BAA to smooth-talk my constituents and those of my hon. Friends and the hon. Member for Harlow into parting with their land when there is no real duty or necessity for them to do so because the third London airport project may never come about. If they are wise they will refuse to part with their land until a full and formal permission for the third London airport exists after detailed scrutiny by the salutary processes of public inquiry and cross-examination. That may well not be until the Greek calends—it may be never. Meanwhile, there is this grave apprehension in the locality alike as to the motives behind the clause and to its likely effect. I, too, am grateful for what my hon. Friend has said by way of reassurance, and that, so far as words can go, is helpful. However, I remind my hon. Friend of the old legal principle that a man is presumed to intend the natural consequences of his acts, and if the natural consequence of the new clause is to assist the pre-emption and prejudgment of this decision, it will

not have served the purpose that we would have wished.

Mr. Robert Rhodes James: I intervene briefly to emphasise to the House that my opposition to Stansted began long before I became an East Anglian Member of Parliament. I was the author, in a previous incarnation, of a report of the Estimates Committee in 1962 which led to the establishment of the London Airports Authority. We investigated very carefully the prospect of Stansted and considered that the arguments for it did not justify it as the third London airport. Having been involved in the matter ever since I find that the doubts that we felt in 1962 have only been confirmed. I emphasise that I held these views long before I became an East Anglian Member of Parliament.
My right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) emphasised the legal aspect of the new clause. The powers that are given to the BAA under the clause, and particularly the words
notwithstanding that it is not immediately so required",
seem to be a regrettable extension of the implication that Stansted will be the third London airport, and that those people who live in the area would be best advised to settle as soon as they can.
I take a much stronger view on this than does my hon. Friend the Member for Saffron Walden (Mr. Haselhurst). I am implacably opposed to the development of Stansted as the third London airport. I do not even accept the stage 1 proposals. I am strongly opposed to stage 2. Beyond that, the clause gives the authority a degree of power, before we reach the public inquiry, which I regard as regrettable. In those circumstances I propose to vote against the clause.

Mr. Tebbit: I do not often feel hurt as a politician, but if it is not desired that people should have the right and the ability to sell to the BAA when they cannot sell to anybody else because of the proposition to build an airport at any place in the United Kingdom, whether it be Stansted, Severnside or Foulness, and if my hon. Friend the Member for Cambridge (Mr. Rhodes James) is saying that he implacably opposes the ability of the authority to ease the problems of those


suffering blight either in its layman terms or in its specific legal term, and that he will oppose their right to sell to the BAA, I could be tempted to seek leave to withdraw the clause. I wonder how happy those who live in the constituency of my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) would be if I sought leave to withdraw the clause, which I have tabled only at their specific request through their Member of Parliament.
The hon. Member for Harlow (Mr. Newens) asked who would meet any loss on the property were the inquiry to come down against the Stansted proposition and the property was required to be sold back. That question does not arise solely about the 2,500 acres to which the clause relates, but to the 1,500 acres, and to any other compulsory purchase order, whether it be for an airport or for some other purpose. It would be for the authority to decide whether it sold back, how it sold back and when it sold back. On its head would fall the loss, if there were any loss. I would be intrigued to find anybody who had lost money in buying and selling property over a period of years in that part of Essex. I do not think that the BAA or the Treasury need sleep uneasily over the prospect of losses arising. If they did, it would be a matter for the authority.

Sir Derek Walker-Smith: Would not that point be powerfully deployed by counsel appearing for the authority at the inquiry? Would he not make a powerful submission that, unless the permission were granted, there may be a loss to public funds by reason of the inability to sell back at as high a price as that at which the authority bought?

Mr. Tebbit: Of course counsel might make the point powerfully, as counsel often do, but I doubt whether anyone would believe him.

Mr. Clinton Davis: Is it not equally right that counsel taking the other side would tell the inspector that he need not take account of that? Is not the inspector well equipped as a person of independent judgment to make a true assessment of the position?

Mr. Tebbit: The point that I was making to my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) was not that

it would not be said and not that it would not be true that, if there was a loss, it would fall on the BAA, but that nobody would believe that there would be a loss. I am sure that my right hon. and learned Friend will not try to kid me into thinking that people are making massive losses on property that they bought five years ago either in East Hertfordshire or around the area of Stansted or Essex generally. He must be pulling my leg, and any inquiry would assume that any learned counsel, however powerful, who made that case would be pulling its leg.

Mr. Newens: I entirely accept the hon. Gentleman's point that one is unlikely to make a loss on land of that sort, but the point lying at the back of this—the Minister will recognise it—is that we wish to probe very deeply to find out whether there is a presumption that the British Airports Authority will be able to get its permission granted on that area.
Does the British Airports Authority intend to purchase merely properties which are offered for sale by people who wish to move out of the area on finding that it is blighted, or does it intend also to go around seeking to acquire as much property as it can and persuading people to go?

Mr. Tebbit: I assure the hon. Gentleman that with the sort of cash limits under which the BAA is working, it will not go out of its way to try to purchase anything that it does not have to purchase. I also assure him that there is no presumption whatever in this piece of legislation or anywhere else about the result of the inquiry none at all.
I am very sorry indeed that this has caused concern to people. My sole concern in bringing it forward has been to help residents of the area around Stansted. My life would have been much easier had I not brought this forward. The life of the BAA would be much easier if it did not have the power to purchase these properties and it could merely say to people who complained to it, "Sorry—no powers". It would make life much easier for it. It would make life much easier for me if I did not upset my hon. Friend the Member for Cambridge by trying to assist the constituents of my hon. Friend the Member for Saffron Walden. It really would be much easier and I


would not have to be up at this hour of the night.

Mr. Rhodes James: I am very sorry if I hurt my hon. Friend, but my point relates specifically to the words
notwithstanding that it is not immediately so required".
That is my objection to his proposal, not to the general efforts he has made on behalf of my constituents and those of my hon. Friend. the Member for Saffron Walden (Mr. Haselhurst). Those are the words which worry me, and if the Minister can appease me on that aspect I shall be happy to support him.

Mr. Tebbit: I should like to appease my hon. Friend, but there is no way of getting round the fact that the area of land in the 2,500 acres is not immediately required. It may never be required. How can I get round the problem of making it possible for the BAA to purchase from people who cannot sell other than by the use of a phrase of this sort?
My hon. Friend the Member for Saffron Walden was, as always, most proper and reasonable in everything he said about this matter. I can assure him that as soon as practicable the persons concerned within the 1,500 acres will have the protection of the statutory blight provisions.
As to those within the 2,500 acres, if it becomes practicable to give the protection to them, by all means it will be given. But it would not be practicable to do that at this stage, in advance of the inquiry; to do so would be to presume to too great an extent. It would, for example, require that my right hon. Friend the Secretary of State for the Environment would have to issue a direction, under article 10 of the Town and Country Planning (General Development) Order 1977, restricting the grant of planning permission in the area. That would attract the relevant statutory blight provisions, but the House might have some comment to make if I were to announce this evening that he was doing that in advance of the inquiry. People might suggest that perhaps we were running just a little fast at this stage in the proceedings.

Mr. Haselhurst: My hon. Friend acknowledges that I have not been challenging the spirit of the new clause. I am looking merely at the level of compensa-

tion that is likely to flow from it and at the rights of my constituents in the event of non-agreement. That is not covered by the new clause. Will my hon. Friend say whether either of the statutes I mentioned could apply and might, therefore, help to assure my constituents on the level of compensation?

Mr. Tebbit: I do not think that I could do that at this stage in relation to the 2,500 acres. In the 1,500 acres, as my hon. Friend knows, once the compulsory purchase orders are made, if there is a difference over the question of compensation the matter might be taken to the Lands Tribunal. But that would not be the position in relation to the 2,500 acres. As the sales would be by agreement, the price would be a matter for negotiation between the parties. I understand that the BAA would expect to pay a price that would be the market value of the property based on its current use and excluding any possible adverse effects of the proposed airport development. But I do not think that it would be possible without presuming too much in other areas to initiate statutory blight provisions at this stage.
I think that the best thing that my hon. Friend's constituents can hope for—indeed, that we can all hope for—is that the procedures of the inquiry will not be unduly prolonged, and therefore, one way or another, an answer will come which will give them some relief—either the relief of being able to resort to the statutory blight provisions, or, alternatively, the relief of knowing that their land will not be taken for the airport development.
My hon. Friend was very fair in what he said about the difficulties of which he had heard. He pointed out that some of the stories were of themselves contradictory. They suggested that the authority was either offering high prices to bludgeon people into doing things that they did not want to do or offering low prices to bludgeon people into doing things they did not want to do, and that both stories were unlikely to be correct. I take the view, however—and I think that this is my hon. Friend's view—that it is not surprising that people who see the countryside in which they have lived for a very long time threatened with change, change which might completely obliterate their homes under an airport,


are liable to be emotional. It would be very surprising if they were not emotional about these matters. Therefore, they are almost bound to see most moves by the BAA and by the Government, and myself and the Secretary of State in particular, as having some dreadful, devious intent, even when all of us are doing our best to assist.
There is no proposition from the BAA to acquire more land than is needed. I do not believe that the BAA is in any way attempting to prejudge the results of the inquiry. Certainly the Government are not doing so.
I turn to the remarks of my right hon. and learned Friend the Member for Hertfordshire, East. As I have said, I am very careful before I tangle with lawyers of his distinction. I am sorry that he does not like the drafting of this clause. I have not checked on the veracity of this, but my advisers tell me that it was modelled upon the Town and Country Planning Act 1959, the Local Government Act 1972, the Water Resources Act 1971 and the Transport Act 1962—all of which, I believe, are the very bread of life to my right hon. and learned Friend; the Town and Country Planning Act being almost literally so. I hope that I have not been wrongly informed.

Sir Derek Walker-Smith: Any modest competence which I am able to earn in my professional activities derives in no small measure from the imprecision and ambiguity of legislation.

Mr. Tebbit: My right hon. and learned Friend is right. But we mere laymen who attempt to legislate frame our legislation very carefully on words which are suggested to us and in a form which is suggested to us by lawyers in our Departments.
I do not know whether there is some unholy alliance between the lawyers in our Departments and those outside who subsequently make their living by disputing the meaning of the words which our lawyers help us to put into legislation. I hope not.
12 midnight
It is not true to say that this is being done to strengthen the BAA's hand. The purchase of this land is necessary not for the BAA's purpose but for the purpose of those who are at present unable to sell.
My right hon. and learned Friend may take the view that for people to sell their land at this stage to the BAA is collaboration with the enemy. He is free to take that view and to advise people not to sell. But it is right that I and the House should make it possible for people to sell to the BAA should they wish to do so. At present the BAA does not have those powers.
One criticism is that the powers are widely drawn. They have to be, or they would be useless. Another is that they do not go far enough. If they went any further we should be in danger of being held to prejudge the inquiry. I believe that we have struck the right balance in doing something to assist particularly the constituents of my hon. Friend the Member for Saffron Walden.
I am sure that there will be disputes because people may rightly feel that they do not want to move; they have a great attachment to their homes. They may feel that its value to them is greater than the price that the authority is willing to offer. That is almost inevitable on occasions of this sort. I hope that the authority will not be mean in its view of the market value of a home. That would not be right. But equally we could not press the BAA to buy properties for more than they were genuinely worth, had the airport not been proposed.
We know that this provision is not perfect. We know that much pain is involved for those in that area, but there would have been much pain for those involved in the area of a new airport wherever it had been put. We should have had to bring forward something of this sort to deal with that problem for the people of Foulness, Stansted or Severnside. I commend this modest assistance to those people at Stansted and any other site which might ever be selected.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 3

CHARGES PAYABLE TO CIVIL AVIATION AUTHORITY

'(1) Section 4 of the Civil Aviation (Eurocontrol) Act 1962 (charges for air navigation services) shall be amended in accordance with the following provisions of this section.

(2) In subsection (1) (power to impose charges for air navigation services) for the words "regulations under this section" there shall be substituted the words "regulations under this subsection".

(3) The following subsections shall be inserted after subsection (1A):
(1B) The Secretary of State may by statutory instrument make regulations:

(a) providing for the payment of an annual charge, of such amount as may be prescribed by the regulations, to the Authority in respect of any aircraft for which there is in force at the time the charge becomes payable a certificate of airworthiness; and
(b) requiring the Authority to refund so much of any such payment made in respect of an aircraft by any person as is equal to the amount which that person becomes liable (whether by virtue of regulations under this section or otherwise) to pay to the Organisation in respect of so much of any flight made by that aircraft as is made over the United Kingdom during the period of twelve months commencing with the date on which the payment to the Authority became due.
(1C) Regulations under subsection (1B) of this section may—
(a) impose liability for any charges payable by virtue of the regulations upon the operators or owners of the aircraft in respect of which the charge is payable; and
(b) impose that liability whether or not the aircraft is registered in the United Kingdom and whether or not it is in the United Kingdom during the year in respect of which the charge is payable; and
(c) include such incidental and supplementary provisions as the Secretary of State considers appropriate for the purposes of the regulations.".
(4) In Subsection (2) liability for air navigation charges):
(a) for the words "under this section" there shall be substituted the words "under subsection (1) of this section"; and
(b) for the words "those services" there shall be substituted the words "the navigation services".
(5) In subsection (3) (determination of charges):
(a) for the words "any such regulations as aforesaid" there shall be substituted the words "any regulations under this section"; and
(b) in paragraph (b), after the words "at such rates" there shall be inserted the word "or of such amounts".'.—[Mr. Tebbit.]

Brought up, and read the First time.

Mr. Tebbit: I beg to move, That the clause be read a Second time.
This new clause need not detain the House long. It is hardly of the same

real and emotional content as the one with which we have just dealt.
The new clause will enable the CAA to establish a simplified scheme for charging for air navigation services which are provided to small general aviation aircraft in United Kingdom airspace. The scheme will apply to aircraft over 1·3 tonnes and under 5·7 tonnes all-up weight. Aircraft under the lower limit will as at present be exempt from any charges and aircraft over the upper limit will continue to pay the normal Eurocontrol rates. Aircraft within the designated band will pay an annual flat rate charge which will entitle them to unlimited use of air traffic services during flights outside regulated air space.
This scheme has several substantial advantages. First, it will reduce the heavy administrative burden arising from the present system of charging each aircraft according to the number of occasions on which it uses air traffic services. Secondly, in many cases the annual flat rate charge will be significantly less than the total bill incurred by aircraft over the year under the current charging system. But, most important, the new scheme will promote increased safety of navigation. Under the existing regulations flights made under the visual flight rules are exempt from any charges and pilots are consequently subject to the temptation not to use navigational aids in conditions where they should do so, since they would thereby incur a charge. Under the new scheme this temptation will be removed. When I say "should do so", I imply that it is not a legal burden, but good airmanship suggests that they should do so.
When aircraft in the designated weight band enter regulated air space they will continue to be liable for the usual Eurocontrol charge, but the flat rate charge which they will have paid already will be rebated accordingly. Foreign aircraft entering United Kingdom space will be able to opt for the new scheme as an alternative to paying the Eurocontrol charge.
This proposal has the support of organisations representing aircraft operators, and I therefore commend it to the House.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 4

BORROWING POWERS OF THE CIVIL AVIATION AUTHORITY

'For section 8 of the Act of 1971 (borrowing powers) there shall be substituted the following section—
8.—(1) Subject to the following provisions of this section the Authority shall have power to borrow such sums as it may require for performing its functions.
(2) The Authority's power to borrow sums in sterling otherwise than by way of temporary loan shall be limited to borrowing from the Secretary of State, or with the consent of the Secretary of State from the Commission of the European Communities or the European Investment Bank, any sums which the Authority may require for capital purposes or for fulfilling a guarantee entered into by the Authority.
(3) Except as provided by subsection (2) above, the Authority may borrow any sums it has power to borrow under subsection (1) above from the Secretary of State or, with the consent of, or in accordance with a general authorisation given by, the Secretary of State, from any other person (and whether in sterling or in currency other than sterling).
(4) The Secretary of State shall not give any consent or authorisation for the purposes of subsection (2) or (3) above except with the approval of the Treasury.
(5) A statement in writing by the Secretary of State to the effect that the approval of the Treasury has been given for any such consent or authorisation shall be conclusive evidence of that fact in any legal proceedings.
(6) The aggregate amount outstanding in respect of the principal of any money borrowed by the Authority under this section and the initial debt shall not exceed £200 million.'.—[Mr. Tebbit.]

Brought up, and read the First time.

Mr. Tebbit: I beg to move, That the clause be read a Second time.
Again, this is a relatively uncontroversial clause whose purpose is to clarify the borrowing powers conferred on the Civil Aviation Authority by section 8 of the Civil Aviation Act 1971, and to increase the authority's borrowing limit from £125 million to £200 million. This clarification is necessary as a result of an amendment to section 8 of the 1971 Act by the Civil Aviation Act 1978, which did not fully take account of the provisions of the Statutory Corporations (Financial Provisions) Act 1975. The latter removed the restrictions on the CAA as to the source and the terms of its foreign currency borrowings.
As presently worded, section 8 of the 1971 Act thus appears more restrictive of the CAA's borrowing powers than is the case. It is highly desirable that potential lenders of funds to the CAA should not be in doubt about the extent of the authority's powers to borrow. Therefore, the proposed clause makes those powers clear. It also simplifies the wording of section 8 of the 1971 Act.
The new section 8 of the 1971 Act inserted by the new clause does not alter the terms of the CAA's borrowing powers, and it continues to provide that the Secretary of State's consent and Treasury approval of that consent are both required before the CAA may borrow.
The proposed clause also provides in subsection (5) that a written statement by the Secretary of State to the effect that Treasury approval has been given to his consent to the CAA to borrow shall be conclusive evidence of the existence of Treasury approval. This provision is designed to ensure that lenders of funds to the CAA are not in any doubt about whether Treasury approval has been received. It should serve to eliminate unnecessary correspondence with lenders who wish the Secretary of State to assure them that Treasury approval has been obtained.
Subsection (6) of the new clause increases the CAA's borrowing limit from £125 million to £200 million. This increase is required to cover the CAA's substantial capital investment programme over the next few years. The CAA's outstanding borrowing currently totals more than £100 million and the existing borrowing limit of £125 million is insufficient to carry it through 1981. The new limit of £200 million proposed by the new clause should permit the authority to meet its needs over the next four to five years.
Subsection (6) of the proposed new section 8 no longer includes a technical provision, first enacted by section 5(1) of the 1978 Act, which enables the CAA to exceed its borrowing limit for the purposes of paying off the whole or part of the initial debt or any loan. This technical provision, which was needed to permit the authority, when close to its borrowing limit, to exceed temporarily that limit during the process of rolling over loans, is no longer required as a result of the proposed increase in the CAA's borrowing limit, and is consequently repealed.
This new clause gives rise to three consequential amendments to schedule 3, part II.
I commend this new clause to the House. The hon. Member for Hackney, Central (Mr. Davis) grappled with some of these problems, and I am sure that he, too, will welcome it.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Further consideration of the Bill adjourned.—[Mr. Berry.]

Bill, as amended (in the Standing Committee), to be further considered this day.

Orders of the Day — SOUTH TRAFFORD DISTRICT HOSPITAL

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Berry.]

Mr. Fergus Montgomery: In the previous debate hon. Members have spoken in the interests of their constituencies. I am pleased to be able to raise, even at 12.11 am, a matter of great concern to my constituents—South Trafford district hospital. That project has been subject to a great deal of delay. I wish to discover why the hospital development has not been approved in principle by the Department of Health and Social Security. I hope that my hon. Friend can end the uncertainty in his reply.
The first formal planning submission to the DHSS was made in June 1978. A revised stage 1 submission was made in May 1979. Further information in support of the submission was presented to the DHSS in March 1980. That information described in considerable detail the need and the nature of the proposed development.
I understand that my hon. Friend the Minister for Health is undertaking a review of all major hospital developments awaiting approval in principle. He apparently has certain criteria against which the developments are to be judged. First, there is a proposed upper limit of 600

beds for district services. Secondly, any consequential closures of small hospitals should be taken into consideration. If the South Trafford district hospital is judged against those criteria, the plans submitted will pass with flying colours. The total number of beds on completion would be 546, which is below the limit set. When phase 1 is completed, Denzell hospital with 19 geriatric beds will close. The premises of that hospital are on lease from the local authority. That lease is due to expire shortly.
No other closures are envisaged because of the need to maintain and expand local provision for the elderly, the elderly severely mentally infirm and the mentally handicapped. Those facilities are in great need in the South Trafford area. Ministerial approval has not been forthcoming, and I am curious to know why the decision has been delayed by the DHSS.
While the first formal planning submission was made to the DHSS in June 1978, the new hospital had been allocated a place in the regional health authority's capital programme as long ago as April 1976. It is more than four years since it went into the region's programme. At that time, the expected starting date for phase 1 of the scheme was 1980–81. By May 1980, the programme starting date had been put back to 1984–85.
The further delay is attributable, in part, to the regional health authority's adjustments to its capital programme to take account of the present financial climate and the additional delay also reflects the lack of a positive decision by the DHSS which has effectively held up detailed planning throughout the past year. It is not without significance that the plan has been firm in all major respects since 1977 and therefore the subsequent delays cannot be attributed to changes of intention or any other local circumstances.
I do not think that my hon. Friend the Under-Secretary or anyone else in the DHSS will deny the need for a new hospital in the South Trafford area. The project was being talked about in the 1960s, when it was felt that there was a need for a new hospital in the area.
In the submissions made to the DHSS the main objectives were, first, to make good the considerable existing deficiencies


in hospital beds and day places in Trafford; secondly, to reorganise the acute services on a more efficient and economical footing, so that ultimately they will all be provided at Park hospital and the South Trafford district hospital—all will be provided in the area made up by Trafford—and, thirdly, to confirm that certain services—maternity, accident and emergency services—will continue to be provided for South Trafford residents in Manchester hospitals.
The need for the new hospital has been acknowledged by the RHA in its regional strategic plan of 1979 which stated that there was a well-defined need in South Trafford. It said:
Even with the enhanced capital programme now intended for the North-Western Region it is impossible to contemplate the total rebuilding of any district general hospitals in the foreseeable future. This means that the phased redevelopment of district general hospitals on their existing site is, for the most part, the only possible proposition. However, in one or two cases where there is a well-defined need (e.g. South Trafford) or where the existing general hospital is already very large (e.g. Victoria Hospital, Blackpool) additional district general hospital sites will be required.
Nothing could be more clearly stated.
The main alternative to the new South Trafford hospital would be to extend Wythenshawe hospital in Manchester, which would become a hospital of about 1,500 beds—a project that I should have thought would be totally at variance with the 600-bed limitation on size proposed by my hon. Friend the Minister for Health. The new South Trafford hospital is intended to complement the developing facilities at Park hospital in the constituency of my hon. Friend the Member for Stretford (Mr. Churchill) in meeting the major part of Trafford's future district hospital needs.
I recognise that certain services will continue to be provided from Manchester hospitals, but the plan will remedy directly the existing gross deficiencies of provisions for the elderly and the mentally ill. Indirectly, it will enable local hospital provision to be made for the mentally handicapped, where none now exists, through the alternative use of existing small hospitals and it will put the provision of acute services on a secure footing for the future.
The provision of a sound basis for acute services in South Trafford is a

vital feature of the total plan, but the DHSS apparently finds it difficult to accept that feature of the plan. The debate about acute services has, in consequence, overshadowed and detracted from the force of the plan in recifying, at an early date, the acknowledged deficiencies in the priority services for the elderly and the mentally ill in Trafford.
We have also to consider the question of cost. In 1978, when DHSS approval was first sought, the cost of phase 1 of the hospital was about £9 million. Today it stands at approximately £15 million. Costs will undoubtedly escalate alongside any further delays.
Other excess costs, both direct and indirect, also derive from the uncertainty about future plans. For example, there are a large number of small acute hospitals in the Trafford area. Apparently it can be proved that the cost per inpatient day in an acute hospital with fewer than 50 beds is higher than in an acute hospital with over 300 beds. This is a measure of the relationship between fixed overheads—for services such as boilerhouse capacity, kitchen facilities, and so on—and the number of beds available.
For example, the 29 acute beds of the Sale and Brooklands hospital could be absorbed within one ward of a larger district general hospital, with virtually no increase in fixed overhead costs. However, the cost of maintaining the Sale and Brooklands hospital for long-stay geriatric patients would reduce considerably. A use of that kind for the hospital and for other existing hospitals in the Altrincham area would be much more appropriate to their size and location within the community. On the regional average cost figures for 1979 it is estimated that, for example, the cost of operating Sale and Brooklands hospital as a geriatric unit, instead of an acute unit, would show a saving of about £210,000 a year.
The absence of a decision about the South Trafford hospital inevitably leads to indecision elsewhere, since most of the plans for redevelopment of existing services are linked inextricably with intentions for the new hospital. This is of particular significance with regard to the small hospitals for which a change of use is planned. Like many of the hospitals in the North-West of England. they are old and in urgent and continuing need of


renovation. The form of renovation adopted, however, will be different depending on whether the hospitals are to continue as acute units or are to be converted for long-stay purposes. Functional requirements are different, but, while capital investment must be maintained in the buildings if they are not to become dilapidated, the area health authority is not in a position, because of the uncertainty, to decide how best to invest.
I believe that the residents in my constituency are the recipients of a patchwork hospital service. Some parts of that service will continue by design to be provided in hospitals in other areas. But the present situation whereby residents from Altrincham and Sale are having to use geriatric and mental illness hospitals in Knutsford and Macclesfield causes serious problems.
I know of at least two elderly constituents who journey every week at great difficulty to Macclesfield to visit their respective spouses. It is a considerable journey for people who have no car and who have to make it by public transport. I cannot help feeling how much easier it would be for them if there were suitable hospitals in the South Trafford area.
The provision of those and other related services on a properly integrated basis within Trafford is bound to produce savings for the National Health Service, but, more important, a new South Trafford hospital will bring with it direct social benefits of a kind envisaged in the recent DHSS proposals, "Health Services—The Future Pattern of Hospital Provision in England". For the first time the people in the South of Trafford will have a central point of focus for their hospital services, and their existing hospitals, which are so well supported by voluntary effort, will largely continue in use.
The new district hospital would not serve only the people who live within the boundaries of South Trafford. It would also be of great value to the people living in the area of North Cheshire. Both Trafford council and the community health council have welcomed the prospect of a new hospital. No doubt they both realise that it will mean the provision of truly integrated health and social services within Trafford.
In a foreword to the consultative paper on the hospital services, my hon. Friend the Minister for Health says
In the past Government has tended to prescribe a single basic pattern for the whole country. This is both unrealistic and undesirable. Different circumstances demand different solutions. Our aim is to establish a set of broad policies acceptable to the professional and other interests concerned and then to give health authorities the greatest possible discretion within these policies and within their financial allocations to arrange their services in the way best suited to their local circumstances.
The area health authority and the regional health authority are in agreement that their financial resources should be used to build a new hospital in South Trafford. It has been shown that the hospital would comply with the broad policies of the DHSS. I feel, therefore, that the case is unanswerable. I hope that my hon. Friend, in his reply, will be the bearer of good news and give us in South Trafford the signal to go ahead with this scheme.

The Under-Secretary of State for Health and Social Security (Sir George Young): I am glad to have the opportunity of debating an issue which, I know, is of concern to the constituents of my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery). He put his case eloquently and displayed a deep knowledge of health issues in his constituency, as those who know him would expect.
I hope that I shall be able to cover all the issues which my hon. Friend has raised, although I think I should say at the outset that I shall not be able on every point to give the definitive answer which I believe he would like to hear. There are good reasons for this, however, as I hope to show.
My hon. Friend has emphasised that there is a need for a decision to be made urgently on the proposed South Trafford district general hospital so that the starting date envisaged by the North-Western regional health authority of 1984–85 can be achieved. He suggested, politely, that discussions between the Department and the region have been unnecessarily protracted without reaching any firm conclusions.
I should like to answer this point first by going back for a moment over the


history of the scheme. As my hon. Friend knows, a development in South Trafford has been under discussion for many years. Late in 1976, it was agreed that the region would prepare proposals for a new hospital there to be submitted to the Department. This submission was received by the Department about 18 months later, but, because of doubts about the scheme which had been proposed, this was withdrawn by the region and a second submission was made in May 1979. Since then, discussions have continued between the Department and the regional health authority with the aim of resolving a number of fundamental problems associated with the scheme which still remained.
These discussions merged into the review of hospital schemes initiated earlier this year by my hon. Friend the Minister for Health and to which my hon. Friend referred, and my officials gained the impression that the region had decided to regard the South Trafford scheme as non-urgent and, indeed, had taken it away to consider it afresh. However, I now understand that this is not the case and that discussions are to be resumed in the near future in the wider context of the long-term strategy for health services in Greater Manchester.
Before turning to the specific problems which I have mentioned, I should like to set the scene briefly by relating the services in South Trafford to those in what has been called inner Greater Manchester. The Trafford area health authority lies to the West of the city of Manchester and contains two main centres of population, divided by the River Mersey—Stretford and Urmston in the North, and Altrincham and Sale in the South. The Trafford metropolitan district to which the area health authority corresponds is an amalgamation of a number of metropolitan boroughs and urban districts in Cheshire and Lancashire, and, unlike most of the Greater Manchester authorities, lacks any historic identity.
The 1981 hospital planning or catchment population for the Trafford area is estimated by the regional health authority as 220,000. For hospital purposes, the area divides into two main parts which are defined by the distribution of the population and the lines of communication. Historically, geographically and socially, the two parts are quite distinct

and communications between them are relatively poor for an urban area.
The northern portion looks for its services to the Park hospital at Davyhulme, which at present has 360 acute beds and is being developed into a district general hospital over a period of years. The RHA's capital programme includes schemes to add geriatric beds and beds for the elderly severely mentally infirm, which will bring the total number of beds to just under 500. There is no major hospital centre at present in the South of the area and some services are provided by a number of small local hospitals.
There are 164 acute beds at Altrincham general, the Sale and Brooklands memorial hospital and St. Anne's ENT hospital and 38 geriatric beds at Denzell hospital and Ashton-under-Mersey. The residents of South Trafford receive a substantial part of their acute services from Wythenshawe hospital in the South district of Manchester AHA, including maternity, accident and emergency and children's services for which there is no provision in South Trafford itself.
As my hon. Friend pointed out there are no mental illness beds in South Trafford and no geriatric beds other than the 38 which I have mentioned. Mental illness beds for North and South Trafford are at the newly upgraded Bridgewater hospital, which is in the Salford area but is managed by the Trafford AHA. Bridgewater also has geriatric beds, but I understand that these are at present used mainly by North Trafford residents.
The area as a whole exports 50 per cent. of its geriatric cases to Withington and Wythenshawe hospitals in south Manchester and 20 per cent. to the Merseyside region. South Trafford probably accounts for the bulk of these exports. But although patients are going to hospitals outside their own area there can be no doubt that relative to the region as a whole the population of Trafford enjoys a high level of service. Some of the hospitals which receive them are relatively close by.
As my hon. Friend has pointed out, the case for siting a new hospital in South Trafford rests most importantly on the need to remedy these deficiencies in geriatric, ESMI and mental illness provision in the area as a whole. I recognise the strength of local support for these


objectives and regard them as entirely acceptable in themselves.
Let me say at once that I fully accept in principle the need to site these services locally and to provide, so far as is possible, acute geriatric and mental illness services in the same location as other acute specialties. I recognise that the RHA's plans to include 100 geriatric and ESMI beds, together with 80 day places in all, in phase 1 of the development would represent a substantial step towards remedying the gaps in provision. I am also aware that its proposal for 150 mental illness beds and 170 day places in phase 2 would enable the needs of the whole Trafford area for mental illness facilities to be met. My hon. Friend the Member for Stretford (Mr. Churchill), has also approached me on this subject.
I should like to confirm that the ultimate size of the new hospital as envisaged by the RHA does not conflict at all with our recent thinking on hospital size. At 489 beds, it is well within the range that we regard as viable.
When all this has been said, however, it is necessary to consider in a wider context the region's wish to accord high priority to a new hospital for South Trafford. It must be seen, first, against the background of the RHA's own declared strategy and in the light of the implications for other parts of the region of committing £12 million to a major capital development in this location. Secondly, any solution for South Trafford must find its place in the overall strategy for the inner part of the conurbation.
Finally, the number of closures which in the long term would result from the opening of the new district general hospital indicates that all the available options must be given the most careful consideration before being rejected. I will take each of these points in turn.
As I am sure my hon. Friend will agree, the pressures facing the North-Western region are considerable. The region has inherited some of the oldest hospital buildings in the country. Two-fifths of them were built before the turn of the century and more than half before 1918. There are also pockets of serious under-provision in particular services and particular localities. Some of the worst deficiencies—as in South Trafford—are

in services for the elderly, especially those suffering from severe mental infirmity, and the mentally ill, and in facilities for the mentally handicapped.
Looking at the region as a whole, it is clear that in some places there are deficiencies almost right across the range of services. The strategic plan which the regional health authority published in July last year sets out a comprehensive programme for putting these deficiencies right. The region's declared aim—which I entirely commend—is that the filling of outright gaps in the level of services must command the highest priority, and that improving the location of services and replacing old buildings—desirable though both of them are—must take second place.
Against this background, it must be borne in mind that Trafford is the only area in the region which is significantly over-funded in relation to its resource allocation working party target. The proposed development would have the effect of giving priority to injecting extra resources into the area, while the residents of other areas face deficiencies in their services across the spectrum. I should need, therefore, to hear more convincing arguments than I have yet heard that relocation of beds in South Trafford is so vital in relation to the level of services which the residents at present receive, whether within the area or in South Manchester, that this priority can be regarded as equitable. After all, it is on the same principle of equity that the north-western RHA as a whole benefits under the RAWP arrangements in relation to the South-East.
I have already indicated that I find persuasive the case for developing geriatric, mental illness and ESMI services in the long run within the Trafford boundaries. Nevertheless, at a time when resources are constrained, developments which are desirable in themselves cannot all be given equally high priority. I am less clear about the region's plans to provide 140 acute beds—196 after phase 3—at the proposed hospital. The over-provision of acute beds compared with a shortage of long-stay facilities in Manchester is a well-recognised and thorny problem to which there are no easy or short-term answers. In my view, it can properly be considered only in the context of the strategy for the health


services of the conurbation. I am therefore asking my officials to take forward, as a matter of urgency their discussions with the region on the future of Greater Manchester.
I turn to the question of closures. I must say that I feel some disquiet on learning that six or seven small hospitals would ultimately close as a result of opening the proposed district general hospital.

Mr. Montgomery: Which hospitals will be closed if the new district hospital is given the go-ahead?

Sir G. Young: I obtained the information from the RHA which will have the list of the six or seven hospitals which, in its view, will have to close. I shall ensure that my hon. Friend has that list as soon as possible.
On the face of it, this seems to run counter to our thinking on the development of hospital services, and I would certainly wish to be assured that all possible options had been explored before I could approve the South Trafford development as presently envisaged. Such options would include the possible development of community hospitals in the area and of other hospitals outside the area but accessible to Trafford residents. These are all matters to which I would expect the Department to give thorough consideration.
I realise that my hon. Friend the Member for Altrincham and Sale may find some, indeed most, of my answers disappointing, but I am sure he will agree that the commitment of £12 million can be approved only after thorough consideration, taking into account the broader aspects of Health Service policy which I have outlined.
To sum up, the issues which I am having explored as a matter of urgency are these. First, has the South Trafford scheme been given the priority which is merited by the relative needs of Trafford as compared with other areas in the region? Secondly, to what extent do the RHA's proposals make sense in the context of a strategy for Greater Manchester, taking into account the convenience to patients of crossing area boundaries? Thirdly, do the concomitant closures make sense? I have asked for the review of the long-term strategy for Greater Manchester to be carried out with all possible speed.
I agree about the need to resolve the uncertainty and blight that further delay would cause. My hon. Friend has served a useful purpose in outlining the consequences of continued indecision. My Department will do all that it can to come to a decision on these vital issues as quickly as possible.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes to One o'clock.